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The clarification addresses issues such as the eligibility of taxpayers who have paid their liabilities before the enactment of Section 128A, the treatment of amounts recovered by tax officers, and the applicability of the waiver in cases involving interest and penalties. Additionally, the circular outlines the conditions for partial waivers, payment timelines, and the impact on transitional credits and erroneous refunds. These guidelines are expected to bring clarity to taxpayers seeking to avail of benefits under the newly introduced Section 128A.
“Various doubts have been raised by the trade and the field formations in respect of implementation of provisions of Section 128A of the CGST Act, relating to waiver of interest or penalty or both in respect of demands under section 73 of the CGST Act Pertaining to Financial Years 2017-18, 2018-19 and 2019-20. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the CGST Act, hereby issues these clarifications and guidelines,” said the Finance Ministry via the Central Board of Indirect Taxes and Customs (CBIC) in a circular dated October 15.
Whether the benefit provided under Section 128A will be applicable to taxpayers who have paid the tax component in full before the date on which the said section has come into effect?
It should be noted that any amount paid for the specified demand before the date announced under subsection (1) of Section 128A will be counted toward the amount due under that subsection. This applies regardless of whether the payment was made before or after Section 128A came into effect, and regardless of whether it was made before or after receiving the demand notice or order. As long as the payment was made before the date mentioned in subsection (1) of Section 128A and was meant for the specified demand, it will be considered valid.
Whether the amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer, against a particular demand can be considered as tax paid towards the same for the purpose of Section 128A?
Yes, the amount recovered by the tax officers as tax due from any other person on behalf of the taxpayer against a demand, shall also be considered as the tax paid towards the said demand, for the purpose of section 128A provided the same has been recovered on or before the date notified under sub-section (1) of section 128A.
Whether Section 128A will cover waiver of penalties under other provisions, late fee, redemption fine etc?
It has been clarified that any penalties, including those under Section 73, Section 122, Section 125, etc., mentioned in the demand notice, statement, or order issued under Section 73, are included in the waiver provided under Section 128A. However, late fees, redemption fines, and similar charges are not covered by the waiver under Section 128A.
Whether the benefit provided under Section 128A will be applicable in cases, where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved?
Where the tax due has already been paid, and a notice or demand order under Section 73 only involves interest and/or penalties, the benefit of Section 128A can still be applied. However, the waiver of interest and penalties will not be available if the interest is due to late filing of returns or late reporting of any supply in the return. This is because the interest in these cases relates to a self-assessed liability and is directly recoverable under sub-section (12) of Section 75, not because of any unpaid tax dues.
Whether payment to avail waiver under Section 128A can be made by utilising ITC?
Additionally, if the demand is due to an erroneous refund that was paid in cash, the required amount must also be paid using only the electronic cash ledger, not the electronic credit ledger.
First Published: Oct 16 2024 | 2:54 PM IST
