𝗣𝗿𝗼𝗰𝗲𝗱𝘂𝗿𝗲 𝗳𝗼𝗿 𝗗𝗲𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁 𝗔𝗽𝗽𝗲𝗮𝗹𝘀 𝗼𝗻 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁/𝗣𝗲𝗻𝗮𝗹𝘁𝘆 𝘂𝗻𝗱𝗲𝗿 𝗦𝗲𝗰𝘁𝗶𝗼𝗻 𝟭𝟮𝟴𝗔 𝗼𝗳 𝗖𝗚𝗦𝗧 𝗔𝗰𝘁.

1. 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.

2. 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.

3. 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.

4. 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