Articles 26th Jul 2024
The introduction of the Goods and Services Tax (‘GST’) was one of the biggest tax reforms in India. Owing to the magnitude of changes brought by GST and lack of clarity during the initial years, there were many interpretational/procedural issues which resulted in issuance of notices by the tax authorities. Recognizing the difficulties faced by the taxpayers during the initial years of implementation, the GST Council in its 53rd meeting held on 22.06.2024 recommended the introduction of a new provision in the Central Goods and Services Tax Act, 2017 (‘CGST Act’).
Pursuant to the recommendation made by the GST Council, the Finance Bill, 2024 has proposed to introduce Section 128A of CGST Act which provides for a conditional waiver of interest and penalty in respect of demands raised under Section 73 of CGST Act for financial years 2017-18 to 2019-20. Section 128A of CGST Act shall come into effect from the date to be notified by the Central Government.
As per the proposed Section 128A of CGST Act, the relief will be available in relation to any amount of tax payable by a person chargeable with tax in accordance with-
| Sr. No. | Description | Relief | Conditions |
| 1. | Show Cause Notice or Statement of Demand issued under Section 73(1) or Section 73(3) of CGST Act, respectively where there is no allegation of fraud, wilful misstatement, or suppression of facts. | Waiver of interest under Section 50 of CGST Act and entire penalty under CGST Act | – Payment of the full amount of tax as per the notice or statement or order, as the case may be, on or before the date, as may be notified by the Government.
– Withdrawal of appeal or writ petition, if any pending, before Appellate Authority, Appellate Tribunal or a Court
|
| 2. | Order-in-Original passed under Section 73(9) of CGST Act confirming full/partial demand proposed in the Show Cause Notice or Statement of Demand issued under Section 73(1) or 73(3) of CGST Act, respectively | ||
| 3. | Order-in-Appeal passed under Section 107(11) of CGST Act confirming/modifying the demand raised in the Order-in-Original | ||
| 4. | Revision Order passed under Section 108(1) of CGST Act | ||
| 5. | Where the Notice is issued under Section 74(1) of CGST Act however any Appellate Authority or Appellate Tribunal or court concludes that the notice that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established. |
It is pertinent to note that the above provision is not available in respect of any amount payable on account of an erroneous refund. Further, in cases where interest and penalty have already been paid in respect of any demand, no refund will be admissible for the same.
If a taxpayer makes full payment of tax as per the notice or statement or the order, as the case may be, on or before the due date to be notified by the Government, all the proceedings in respect of such notice or statement or order will be deemed concluded. However, in case the department has filed an appeal before the Appellate Authority or Appellate Tribunal or High Court or Supreme Court against a favorable/partial favorable order, the conclusion of proceedings will be subject to condition that the taxpayer pays the additional amount of tax payable, if any, in accordance with the order of Appellate Authority or Appellate Tribunal or Revisional Authority or High Court or Supreme Court within three months from the date of order.
Given the recent upswing in legal disputes, a substantial portion of which is attributed to uncertainties during the initial years of GST, the introduction of amnesty scheme presents a great opportunity for the taxpayers to move forward without baggage of past disputes. However, trade my face multiple issues like:
The CBIC may consider issuing a clarification for seamless implementation of the scheme. Considering that the proposed Section 128A does not provide for procedural aspects of the scheme it is only reasonable to expect that specific details pertaining to the scheme at granular level will be provided by way of rules.
While, for the trade, the scheme provides an opportunity to the taxpayers to opt for amnesty and close litigation of transitional/contentious issues faced during the period 2017-18 to 2019-20, however like any other amnesty scheme, the success of the present scheme will depend on simplicity of the procedure which a taxpayer has to observe while opting for the amnesty scheme. Also, one of the most important impacts of the present amnesty scheme would be a reduction of the pendency before the GST Tribunal which will be operationalized soon. At present there are already a significant number of appeals pending to be filed before the GST Tribunal and the amnesty scheme, if successful, will reduce the initial pendency before GST Tribunal as disputes for the period 2017-18 to 2019-20 will stand settled under the scheme.
We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:
Jitendra Motwani, Partner – Email – jitendramotwani@elp-in.com
Shilpi Jain, Associate Partner – Email – shilpijain@elp-in.com
This article has been published on Taxsutra.
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