Waiver of Interest or Penalty or both_Section 128A
INTRODUCTION: -
Section 128A, as proposed by the Finance Act,
2024 (No. 2), dated 16.08.2024, through Section 146, was notified via
Notification No. 17/2024 – Central Tax, dated 27.09.2024, and will be
applicable from 01.11.2024.
Section 128A provides a unique opportunity for
taxpayers to settle their tax liabilities without paying interest and penalties
under certain circumstances. This section focuses on cases where a taxpayer has
an outstanding tax liability for the period from July 1, 2017, to March 31,
2020. It allows such taxpayers to settle their dues with significant relief if
they meet the specific conditions outlined in this section.
PERIOD FOR WHICH RELAXATION IS PROVIDED: -
July 1, 2017, to March 31, 2020 (covering the
financial years 2017-18, 2018-19, and 2019-20).
ANALYSIS AND INTERPRETATION OF SECTION 128A: -
Key Points: -
Who is eligible? Taxpayers who have received tax notices or
orders under Section 73 (Non fraud Case) or Sections 107 (Appeal to 1st
appellate authority)/108 (Revisional authority's power) related to the period
from July 1, 2017, to March 31, 2020.
Main Benefits: If eligible taxpayers pay the full amount of
tax within the specified time notified by the government, they will be exempt
from paying interest and penalties on that amount.
THE
FOUR MAIN SCENARIOS COVERED UNDER SECTION 128A (1) AND PAYMENT DUE DATE: -
· Scenario 1: Taxpayers who have received a notice under
subsection (1) of Section 73 or a statement under subsection (3) of Section 73,
but no order under subsection (9) of Section 73 has been issued.
Due
Date: 31.03.2025 (Notification No.
21/2024-CT_08.10.2024).
· Scenario 2: Taxpayers who have received an order under
subsection (9) of Section 73, but no order under subsection (11) of Section 107
or subsection (1) of Section 108 has been passed.
Due
Date: 31.03.2025 (Notification No.
21/2024-CT_08.10.2024).
· Scenario 3: Taxpayers who have received an order under
subsection (11) of Section 107 or subsection (1) of Section 108, but no order
under subsection (1) of Section 113 has been passed.
Due
Date: 31.03.2025 (Notification No.
21/2024-CT_08.10.2024).
· Scenario 4: If a notice has been issued under Section
74(1) (which deals with cases involving tax evasion or fraud), and an order is
issued or needs to be issued by the tax officer following the instructions
given by an Appellate Authority, Tribunal, or court (as per Section 75(2)),
then this notice or order will be treated the same as a notice or order
mentioned in Scenario 1 or Scenario 2.
Due
Date: Date ending on completion of six
months from the date of issuance of the order by the proper officer redetermining
tax under section 73 of the said Act. (Notification No. 21/2024-CT_08.10.2024).
CONDITIONS: -
The relief is available only if the taxpayer
pays the full tax liability on or before the date notified by the government,
based on the recommendations of the GST Council (54th Meeting of GST
council held on 09.09.2024 recommended 31.03.2025 as the last date on or before
which the payment of tax may be made by the registered person). All proceedings
related to the said notice, statement, or order will be deemed concluded,
subject to prescribed conditions.
SPECIFIC
ACTION OCCURRENCE: WHERE: -
· An application is filed under Section 107(3)
(appeal to the Appellate Authority by the authorized officer) or Section 112(3)
(appeal to the Appellate Tribunal by the authorized officer).
· A central tax officer files an appeal under
Section 117(1) (appeal to the High Court) or Section 118(1) (appeal to the
Supreme Court).
· Any proceedings are initiated under Section
108(1) (revisional authority's power).
And these actions are against an order
referred to in Scenario 2 or Scenario 3, or against the directions given by the
Appellate Authority, Appellate Tribunal, or court as mentioned in Scenario 4,
then:
The taxpayer must pay any additional tax
amount decided by the Appellate Authority, Tribunal, court, or Revisional
Authority within three months from the date of their order. This means that if,
after the appeal or proceedings, it is determined that the taxpayer owes more
tax, they must pay this additional amount within three months.
Only when the taxpayer pays this additional
amount within the given three months will the proceedings be considered
finalized or concluded under this section. This ensures that all dues are fully
paid before the case is considered fully settled.
NO REFUND CLAUSE: -
If a taxpayer has already paid interest and
penalties before this scheme, they will not be eligible for a refund.
EXCLUSIONS:
-
· This section does not apply if the amount
payable is due to an erroneous refund.
· It also does not apply to cases where an
appeal or writ petition filed by the taxpayer is pending before the Appellate
Authority, Appellate Tribunal, or a court and has not been withdrawn by the
taxpayer on or before the notified date.
FINALITY OF PROCEEDINGS: -
Once a taxpayer pays the specified amount
under this section, no further appeals under Section 107(1) or 112(1) against
the related orders will be permitted.
CONCLUSION: -
Section 128A provides a mechanism for
taxpayers to resolve their tax liabilities related to specific periods (from
July 1, 2017, to March 31, 2020) without incurring interest and penalties,
provided they adhere to the conditions outlined. It aims to ease the compliance
burden on taxpayers while ensuring that the government efficiently collects
outstanding taxes.
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