Procedure for handling appeal for section 128A
GST Instruction No 02/2025 has issued for procedure for handling appeal for Section 128A . Section 128A of CGST Act,2017, allows taxpayer to get waiver of interest, penalty or both for tax demands issued under section 73 for the FY 2017-18 to 2019-20. However, this waiver is subject to certain conditions.
Some GST officers have raised doubts about whether this waiver can also applied in cases where,
- The Taxpayer has already paid the tax, but the department has filed appeal due to miscalculation of interest.
- The Penalty was either not imposed or imposed at lower amount than the minimum required for waiver.
To clarify these issues, the GST department issued circular no 238/32/2024-GST on 15-10-2024 which provides detailed guidance on how section 128A should be applied in such case.
Key Clarifications are as under:
If the taxpayer has already paid the full amount of tax, but the demand notice under section 73 is only for Interest and/ or penalty, then the taxpayer can avail the benefits of section 128A.
If the tax department has filed or planning to file an appeal just because of wrong calculation of interest /penalty the taxpayer should not be denied the benefit of section 128A. The purpose of this provision is to reduce unnecessary litigation, so technicalities should not be used to reject the benefit.
In order to provide benefit to taxpayer , GST Officer should withdraw appeal, if an appeal filed by the department on interest and penalty issue.
If the case is still in the review stage, the officer should accept the existing order without further dispute.
In short, if the taxpayer paid full amount of tax but only dispute is about interest or penalty, they should still get the waiver under section 128A. Officers are instructed to withdraw unnecessary appeals and accept decisions that meet the criteria, making the process smooth and reduce the litigation.
