Clarification on Waiver of Interest and Penalty under Section 128A of CGST Act
Circular No.: 238/32/2024-GST
Date of Circular: 15th October 2024
Relevant Sections and Rules:
- CGST Act, 2017: Sections 73, 75(2), 107, 108, 113, 128A, 168
- CGST Rules, 2017: Rule 164
- Finance (No. 2) Act, 2024: Section 128A – Waiver of interest or penalty for FYs 2017–20
- Notifications:
- No. 20/2024-CT dated 08.10.2024 (Rule 164 inserted)
- No. 21/2024-CT dated 08.10.2024 (Deadline fixed: 31.03.2025)
Clarification on Waiver of Interest and Penalty under Section 128A of CGST Act
- Objective and Scope of Section 128A:
Section 128A provides for waiver of interest, penalty, or both for demands raised under Section 73 for FY 2017–18, 2018–19, and 2019–20.
Applicable in cases where:
- Notices/statements under Section 73 are issued but no final orders yet;
- Orders issued under Section 73 but no appellate/revisional orders passed;
- Appellate/revisional orders passed, but no Tribunal order yet;
- Section 74 cases are re-determined under Section 73 as per Appellate/Court direction.
- Filing of Applications:
- Form GST SPL-01: For cases where only notice/statement issued (no order yet).
- Form GST SPL-02: For cases where order under Section 73/107/108 passed.
- Deadline:
- Normally within 3 months from 31.03.2025.
- 6 months if tax is re-determined under Section 75(2).
- Payment of Tax Dues:
- For pending notices: pay via DRC-03.
- For orders passed: pay via electronic liability register (ELR).
- If already paid via DRC-03: adjust using DRC-03A.
- Tax component related to Section 16(4) (denied earlier) now eligible under 16(5)/(6) must be deducted while computing tax due.
- Processing of Application:
- Proper officer must issue order in GST SPL-05 (approval) or SPL-07 (rejection).
- If no order issued within timeline, application is deemed approved.
- Application cannot be filed without withdrawal of pending appeals/writs.
- Appellate remedy available only against rejection order SPL-07 via APL-01.
- Conditions for Valid Waiver:
- Entire tax demand must be paid (no partial waiver).
- Waiver not applicable to late fees, redemption fines, or tax under Customs Act.
- Available for IGST, Compensation Cess, and transitional credit (if demanded under Section 73).
- Clarified Issues:
| Issue | Clarification |
| Tax already paid before 01.11.2024 | Eligible for waiver if paid toward the demand |
| Recovery from third parties | Treated as taxpayer’s payment |
| Interest/penalty already paid | No refund or adjustment allowed |
| Only interest/penalty demanded | Waiver applicable if linked to Section 73 |
| Partial payment/waiver | Not allowed |
| Mixed period notices | Allowed, but waiver applies only to eligible periods |
| Erroneous refund demands | Must be paid in full; waiver not available for that portion |
| Departmental appeal pending | Additional demand must be paid within 3 months, else waiver void |
| SLP pending in SC | Must be withdrawn to avail benefit |
| Payment via ITC | Permitted except in RCM, e-commerce, or erroneous refund cases |
Source: Circular No.: 238/32/2024-GST
