CBIC issues clarifications pertaining to amnesty scheme under GST

This Tax Alert summarizes recent Circular[1] issued by Central Board of Indirect Taxes and Customs (CBIC) clarifying various issues relating to the provisions of waiver of interest and penalty (amnesty scheme) under Section 128A of the Central Goods and Services Tax Act, 2017 (CGST Act).

The key clarifications are:

• Benefit of amnesty scheme can be taken where the demand under notice or order pertains only to interest and/ or penalty, other than interest on self-assessed tax.
  
• Where notice/ order contains multiple issues, benefit of the scheme cannot be taken for part of the issues by making payment of tax only in respect of such issues and litigate other matters. 
• In cases where notice or order covers issues both eligible and not eligible under the scheme, the benefit under Section 128A will be available only on payment of entire demand in such notice or order.
• If tax liability is enhanced in departmental appeal against the order in respect of which benefit of the scheme is being taken, it shall be subject to payment of additional amount of tax within three months from the date of the appeal order.
• Demands pertaining to irregular availment of transitional credit will also be covered under Section 128A, if the amount of such transitional credit has been availed in the period eligible for waiver.
• The benefit of waiver is not available with respect to demand of integrated tax charged on import of goods under the Customs Act, 1962.

Comments

• Issue based settlement instead of notice or order based settlement under the amnesty scheme could have helped businesses to contest other issues where they have a strong case to defend the demand.
  
• Applicability of the scheme in case of notices or orders pertaining to only interest and/or penalty is a welcome clarification.  However, the same could also have been extended to interest on self-assessed tax.
• Provision for withdrawal of even departmental appeal once the taxpayer files an application under the scheme, could bring in certainty for the applicant.  Internal instructions to tax authority in this regard may also help.  

[1] Circular No. 238/32/2024-GST dated 15 October 2024