GST AMENSTY SCHEME, 2024 (2.0) – Analysis of Section 128A: Waiver of Interest or Penalty for Certain Tax Periods w.e.f 1/11/2024

Overview:
Section 128A provides relief for taxpayers in specific cases where they owe taxes but can avail of a waiver of interest and penalties, provided they meet certain conditions. The section focuses on waiving penalties and interest for tax liabilities pertaining to the period from July 1, 2017, to March 31, 2020. This waiver is contingent upon the taxpayer paying the full amount of tax due within the timeframe notified by the government.

1. Eligibility for Waiver: The waiver applies to tax liabilities raised under Section 73 (for non-fraudulent cases), where the taxpayer has not yet been issued an order or is in the process of contesting the order at various stages of litigation.
   • Clause (a): Applies to cases where a notice has been issued under Section 73(1) or a statement under Section 73(3), but no order has been passed.
   • Clause (b): Applies to cases where an order has been passed under Section 73(9), but the matter has not yet been reviewed under Section 107 or Section 108.
   • Clause (c): Applies to cases where an order has been passed under Section 107(11) or Section 108(1), but the matter is not yet under scrutiny under Section 113.
2. Waiver Timeline: The taxpayer must pay the full amount of tax due by the date notified by the government. If they do, the interest under Section 50 and the penalty applicable will be waived.
3. Impact on Proceedings: Once the taxpayer pays the full tax due, all proceedings related to the notice or order will be deemed concluded, provided all conditions are met.
4. Exceptions:
   • Fraudulent cases (Section 74): If the case involves fraud, misrepresentation, or suppression of facts, Section 128A does not apply.
   • Erroneous Refunds: If the amount payable pertains to erroneous refunds, this section will not apply.
   • Pending Appeals: If the taxpayer has filed an appeal or writ petition against the tax demand, the taxpayer must withdraw the appeal before the notified date to be eligible for the waiver.
5. Conclusion of Proceedings (Sub-section 4): Once the taxpayer has paid the required amount and the proceedings are deemed to have been concluded, no further appeal will lie under Section 107 or Section 112 regarding the concluded order.
6. No Refund for Penalties or Interest Already Paid: If a taxpayer has already paid interest or penalties on the tax due for the specified period, no refund will be available under this provision.

Implications:

• Benefit to Taxpayers: Section 128A is beneficial for taxpayers who want to resolve outstanding tax liabilities for the period between July 2017 and March 2020 without incurring additional penalties or interest.
• Government’s Objective: By providing a waiver, the government aims to reduce litigation and encourage taxpayers to settle their tax dues promptly.

Example:

A taxpayer is issued a notice under Section 73(1) for the tax period July 2018 for non-payment of taxes. The taxpayer is liable for ₹10 lakh in unpaid taxes. If the government notifies a date of October 31, 2024, the taxpayer must pay the entire ₹10 lakh by this date to avail of the waiver of interest and penalties. After paying the tax, all proceedings related to this notice will be considered concluded, and the taxpayer will not be liable for any further penalties.

Conclusion:

Section 128A provides a one-time relief mechanism for taxpayers with tax liabilities pertaining to the early years of GST implementation. By settling their outstanding dues within the specified timeframe, taxpayers can avoid paying interest and penalties, thus simplifying the process and reducing the cost of compliance. However, it is crucial for taxpayers to ensure they meet all the prescribed conditions and deadlines to avail of the benefits of this waiver.