Amnesty under sec 128A read with rule 164 and circular 238/2024- Demystified

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Based on the recommendations of the GST Council made in its 53rd meeting, Section 128A has been inserted in the CGST Act, 2017 with effect from 01.11.2024 to provide for waiver of interest or penalty or both, relating to demands under section 73 of the CGST Act pertaining to Financial Years 2017-18, 2018-19 and 2019-20, subject to certain conditions.

Subsequently, based on the recommendations of the GST Council made in its 54th meeting, Rule 164 has been inserted in CGST Rules, 2017 with effect from 01.11.2024 vide notification No.20/2024-Central tax dated 8th October 2024, providing for procedure and conditions for closure of proceedings under section 128A of CGST Act.

Further, on top of this CBIC issued a Circular No. 238/32/2024-GST dated 15th October 2024 to demystify these new provision and rule, yet there are overlaps unavoidable in this circular as it traces underlying provision and rule as necessary. The FAQs is good value addition though. 

Over this blog, the procedures with sequence kept simple to follow this process which is anyway going to have a short relevance in terms of time but its very likely CBIC may follow this procedure time and again during similar circumstances in future. 

Procedures to claim benefits under sec 128A read with rule 164 and circular 238/2024:

  1. Various stages of a proceeding:
    • Notice - Sec 128A(1)(a)
    • First Appeal- Sec 128A(1)(b)
    • Tribunal- Sec 128A(1)(c)
  2. Payment of tax demanded including erroneous refund, demands relate to period outside coverage under sec 128A and demand that’s self-assessed ( refer#6 of FAQ vide circular 238/2024); but excluding demand not payable u/s 16(5)&(6) is to be made well before 31st March 2025.
    • DRC_03 mode is good enough for clause 1
    • For Clause b&c- Payment should be against the liability; if by mistake FORM GST DRC-03 was used, correct the same by filing FORM GST DRC-03A.
  3. Application to avail the benefit of amensty in FORM:
    • FORM GST SPL-01- clause a
    • FORM GST SPL-02 – clause b&c
  4. The said application is to be filed within 3 months from 31st March 2025. In case of Sec 75(2) scenarios, it will be 6 months from date of order of re-determining the demand under sec 73
  5. Application should accompany the copy of the order of withdrawal; if the order is pending, then upload within a month from date of issuance of such order
  6. The proper officer to issue SCN in FORM GST SPL-03 within 3 months from date of application with opportunity for PH
  7. Reply to be filed in FORM GST SPL-04 within a month
  8. If the proper officer is satisfied with that reply- issues order in FORM GST SPL-05 within 3 months from the date of reply in FORM GST SPL-04 or 4 months from the date of FORM GST SPL-03 if no reply filed. For this purpose- time from the date of filing application in FORM GST SPL01 or 02 till the upload of the order of withdrawal will not be considered (refer bullet 5 as above).
    • Summary order in FORM GST DRC-07 need not be issued
    • Liability in Electronic Liability Register will be modified appropriately.
  9. If proper officer is not satisfied with the reply, then issues order in FORM GST SPL-07
  10. If no order issued within the time limit- the proceedings shall deemed to be approved and concluded
  11. If no appeal is filed against FORM GST SPL-07, the original appeal will be restored.
  12. If appeal is filed against FORM GST SPL-07 where
    • The appellate authority is satisfied will issue order in FORM GST SPL-06
    • If he is not satisfied, the original appeal will be restored subject to undertaking in FORM GST SPL-08 that no appeal will be filed separately again the Order in FORM GST APL-04
  13. Unless additional liabilities, if any as cited in bullet 2 is paid, FORM GST SPL-05 or 06 shall become void.

Flow chart

If you may closely observe, the payment is the first step which needs to be made within the notified date followed by application to withdraw the appeal in case of clause b & c of Sec 128A(1) to apply for this amnesty. Unfortunately multiple demands in a notice or order are inseparable for the purpose of making payment, and we have to pay full demand in order to start this process, its a rider in this amnesty scheme. For some it may appear to give small fish to catch big fish along with that and arrest litigation on those. However, good things are payment recovered from your customers can be adjusted against this demand but not your self-assessment liability sadly. GST is always to put to a test for 'ease of business', this is yet another test though.

- CA LDR



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