- Section 128A of CGST Act, 2017, along with Rule 164 of CGST Rules, 2017, allows a waiver of interest and/or penalty for tax demands under Section 73 for FY 2017-18, 2018-19, and 2019-20, subject to conditions.
- Several field offices sought clarification on whether this benefit applies when:
- The taxpayer already paid the tax, but the department appealed due to miscalculated interest.
- Penalty was either not imposed or imposed incorrectly below the required threshold.
- Clarification:
- If the tax is fully paid and the dispute is only about interest and/or penalty, the taxpayer qualifies for the Section 128A benefit.
- The department should not deny the benefit just because it has filed or plans to file an appeal.
- The goal of Section 128A is to reduce litigation, so technicalities should not block relief.
- Decision:
- If the department has appealed (or plans to appeal) due to incorrect interest or penalty calculations, the proper officer should withdraw the appeal.
- If the review process is ongoing, the officer should accept the taxpayer’s eligibility under Section 128A.
Notification Reference: GST 07/02/2025