The Central Goods and Services Tax (CGST) Act, 2017, through Section 128A, outlines the waiver process for interest or penalties on tax demands. This section specifically addresses the conditions under which taxpayers can file for waivers, the process for payment, and how disputes are handled. In this article, we will examine essential aspects of Section 128A, focusing on payment methods, application processing, and appeal mechanisms. Here's a breakdown of the key elements:

Payment of Tax and Deduction for Retrospective ITC Adjustments

1. Payment of Tax

Adjudication Status:

·         For notices or statements pending adjudication, taxpayers must make payments via FORM GST DRC-03.

·         For adjudicated orders, payments should be made through the Electronic Liability Register (ELR) Part II, as prescribed in Circular No. 224/18/2024-GST. If the payment was initially made via GST DRC-03, it can be adjusted by filing FORM GST DRC-03A.

Deadline:

All payments must be completed by March 31, 2025. In special cases where orders need redetermination under Section 73, payments should be made within six months of the redetermination.

2. Deduction for Retrospective ITC Adjustments :

Due to amendments in Section 16, amounts initially denied due to non-compliance with Section 16(4) may now be deductible if compliant with newly added sub-sections (5) and (6). However, this deduction applies only to instances where ITC was denied solely on Section 16(4) grounds.

Waiver Application Process and Appeal Process

3. Waiver Application Process :

The process involves filing either FORM GST SPL-01 or FORM GST SPL-02 for waiver applications, depending on the nature of the demand. The proper officer, who handles the waiver applications, will issue a notice if the application is found ineligible. Applicants can respond to the notice through FORM GST SPL-04.

If the waiver is approved, an order will be issued in FORM GST SPL-05. Conversely, if denied, the officer will issue FORM GST SPL-07. Orders not processed within the stipulated period are automatically approved under FORM GST SPL-05.

4. Appeal Process :

Taxpayers cannot appeal against orders concluding the proceedings under Section 128A (FORM GST SPL-05) but may appeal against rejection orders (FORM GST SPL-07) within the timeframe specified in Section 107. In cases where an appeal is filed and the appellate authority overturns the rejection, the waiver application may be reinstated.

Conclusion

Section 128A of the CGST Act, 2017, provides essential guidelines on tax payment, deduction eligibility, waiver applications, and appeal mechanisms for taxpayers. By adhering to these protocols, taxpayers can potentially avoid interest and penalty payments, streamlining compliance efforts. This provision also strengthens administrative clarity, ensuring that taxpayers have clear, actionable steps for addressing tax demands and navigating waiver applications.

These steps for tax payment, waiver applications, and appeal processes, helping taxpayers effectively navigate Section 128A of the CGST Act.