GST Amnesty Scheme 2024: The introduction of Section 128A in the Central Goods and Services Tax (CGST) Act marks a significant step towards easing tax compliance for businesses. Proposed during the 53rd GST Council Meeting, this section aims to provide conditional waivers of interest and penalties for specified tax periods. This scheme is popularly referred to as the GST Amnesty Scheme 2024.

Let’s dive into the key details, including eligibility, procedure, and important dates.

What is the GST Amnesty Scheme?

The GST Amnesty Scheme is introduced to provide relief to taxpayers who have not filed their returns on time or have made errors in compliance. The scheme aims to promote voluntary compliance by waiving or reducing penalties for defaulters.

Overview of Section 128A: Amnesty Scheme

The GST Amnesty Scheme, formalized under Section 128A of the CGST Act, was introduced via the Finance (No. 2) Act, 2024, and became effective from November 1, 2024, as per Notification No. 17/2024-Central Tax. This scheme offers relief by waiving off interest and penalties related to tax demands for FY 2017-18 to FY 2019-20, provided certain conditions are met.

Key Highlights of Section 128A:

1. Conditional Waiver:
   Taxpayers who have received demands under Section 73can avail of a conditional waiver of interest or penalties if they:
   • Pay the full tax amount by March 31, 2025.
2. Statutory Basis:
   • Sub-section 128A(1):Lays down eligibility criteria and conditions.
   • Sub-sections 128A(2) & (3):Outline exclusions from the scheme.
   • Sub-section 128A(5):Prohibits further appeals once proceedings under the scheme are deemed concluded.

Eligibility for GST Amnesty Scheme

To qualify for the scheme, taxpayers must meet the following conditions:

• Tax Demand Period:The demand must pertain to the financial years 2017-18, 2018-19, or 2019-20.
• Tax Demand under Section 73:Only demands raised under Section 73 (relating to tax shortfalls without intent of fraud) are covered.
• Full Tax Payment:The entire tax amount as mentioned in the notice must be paid on or before March 31, 2025.

Exclusions

Certain cases are explicitly excluded:

• Cases involving fraudulent transactionsor misrepresentation.
• Tax demands raised under Section 74(pertaining to fraudulent activities).

Procedural Framework: Rule 164

In the 54th GST Council Meeting, further procedural clarifications were recommended. These were formalized via Notification No. 20/2024-Central Tax and Notification No. 21/2024-Central Tax, both dated October 8, 2024. The notifications provide a detailed framework under Rule 164 of the CGST Rules, 2017.

Key Provisions of Rule 164:

1. Payment Timeline
   Taxpayers must make the payment by March 31, 2025, to avail of the scheme benefits.
2. No Further Appeals
   Once proceedings are concluded under the scheme, no further appeals will be entertained.

Key Benefits of GST Amnesty Scheme

1. Financial Relief:
   • Significant reduction or waiver of late fees and penalties reduces the financial burden on taxpayers.
2. Restoration of GST Registration:
   • In some cases, the scheme allows for the restoration of GST registrations canceled due to non-compliance.
3. Improved Compliance Rating:
   • Regularizing compliance under the scheme can improve a business’s GST compliance rating, which may be beneficial in the long run.
4. Avoidance of Legal Proceedings:
   • The scheme helps taxpayers avoid legal notices, penalties, and audits related to past non-compliance.

Important Dates

• Scheme Implementation:November 1, 2024.
• Deadline for Payment:March 31, 2025.
• Notification of Rules:
  • Rule 164: Effective from November 1, 2024.
  • Clarifications Pending:Awaited via a circular for better understanding of the scheme.

Some other important conditions

1. Where the notice/order also partially consists of a demand for erroneous refund, the application will be filed only after depositing the entire amount of tax demanded is deposited. [Rule 164 (3)
2. Where the period involved in the demand falls within any other period other than this scheme [FY 2017-18 to FY 2019-20], the application can only be filed after paying the total demands made. [164 (4)]
3. The amount that is payable before the application shall be that calculated from the formula: amount not payable or the amount set out in ss. 16(5), 16 (6); [164 (5)]
4. The application shall be accompanied by documents of withdrawal of appeal / petition, if any. However, if the application has been filed but the order of withdrawal has not been made and served, the applicant shall upload a copy of the application. The order of withdrawal shall be uploaded by the Applicant within one month from the date of issuance. [164 (Z)]
5. If the Applicant does not file any appeal against rejection order (GST SPL 07) then the appeal which was withdrawn for filing of GST SPL 02 shall be revived. [Rule 164 (15)(a)]
6. However, if the applicant files the appeal against the rejection order, and the same is also rejected, his appeal which was withdrawn for filing the GST SPL 02 will be restored, subject to his undertaking in form GST SPL 08 within three months of the order rejecting an appeal against GST SPL 07. [Rule 164 (15)(b)(ii)].
7. If the second proviso to sub-section (1) of section 128A is attracted in an appeal or by revision by the Revenue Department and an additional amount in terms of tax liability is demanded and if such amount is not paid within the time limit prescribed in the second proviso to sub-section (1) of section 128A for the period for which interest or penalty or both, has been waived under section 128A in terms of any
8. Where the taxpayer is called to pay any amount of interest and/ or penalty in respect of any demand about erroneous refund or any demand about the period other than the period 01.07.2017 to 31.032020, and the details of such amount mentioned in the FORM GST SPL-05 or FORM GST SPL-06 the applicant shall pay the said amount of interest and/ or penalty within three months of receipt of the said orders. Hence, it argued that in the event the amount is not paid within the said period, the waiver shall be of no effect.

Conclusion

The GST Amnesty Scheme under Section 128A offers a crucial opportunity for taxpayers to settle old tax disputes with reduced penalties and interest. Businesses should leverage this scheme to clear outstanding liabilities while ensuring compliance with procedural requirements.

With the deadline set for March 31, 2025, it’s advisable to act promptly to benefit from the conditional waivers. Stay tuned for the official circular to gain more clarity on the implementation process.