CBIC has issued GST Circular 248/05/2025 which provides clarifications on availing the benefits offered under Section 128A of the CGST Act, 2017, i.e. waiver of interest or penalty related to certain GST demands. This update addresses specific issues raised by trade and industry, as key clarifications regarding payment methods and the treatment of demands covering multiple periods are provided by CBIC.
Background: Understanding Section 128A
i) Section 128A was introduced into the CGST Act, effective November 1, 2024, following recommendations from the GST Council.
ii) This section provides for a conditional waiver of interest or penalty (or both) related to tax demands raised under Section 73 (pertaining to non-fraud cases).
iii) This benefit applies specifically to demands for the financial years 2017-18, 2018-19, and 2019-20 (i.e., from July 1, 2017, to March 31, 2020).
iv) Rule 164 was also inserted into the CGST Rules, 2017, outlining the procedure for availing this benefit.
v) Initial clarifications were previously issued via GST Circular 238/32/2024 dated October 15, 2024.
Clarifications Provided by GST Circular 248/05/2025
Representations highlighting practical difficulties faced by taxpayers led to the issuance of this new circular. The key clarifications are detailed below:
1. Eligibility for Payments Made via GSTR-3B Before November 1, 2024
Issue: Concerns were raised whether taxpayers who paid the demanded tax through their FORM GSTR-3B return, before Section 128A came into effect (November 1, 2024), are eligible for the waiver benefit under this section. The prescribed method post-notification generally involves FORM GST DRC-03 or specific electronic liability register adjustments as per Rule 164.
Clarification:
i) It is confirmed that payments made towards the demand via FORM GSTR-3B prior to November 1, 2024, are eligible for consideration under Section 128A.
ii) This eligibility is subject to the condition that the payment was intended for the specific demand raised under Section 73 for the eligible period.
iii) Verification by the proper officer will be required to confirm the payment and its intent.
Important Note: For any payments made on or after November 1, 2024, taxpayers must adhere strictly to the payment modes prescribed under Rule 164 (e.g., FORM GST DRC-03, specific electronic register debits) to avail the benefit.
2. Handling Demands and Appeals Spanning Multiple Periods
Issue: How should taxpayers proceed when a single demand notice, statement, or order covers periods both within the scope of Section 128A (FY 2017-18 to 2019-20) and outside it? Specifically, questions arose regarding the amount of tax to be paid and the requirement for withdrawing appeals.
Clarification:
i) Rule 164(4) and the proviso to Rule 164(7) have been amended to facilitate such cases.
ii) Taxpayers are required to pay only the tax amount pertaining to the period covered under Section 128A (i.e., FY 2017-18 to 2019-20) to avail the waiver benefit for that specific period.
iii) An application in FORM SPL-01 or FORM SPL-02, as applicable, should be filed after making the payment for the eligible period.
iv) If an appeal is pending, the taxpayer must intimate the relevant appellate authority or tribunal about their intention to avail the Section 128A benefit. This intimation should clarify that the appeal is not being pursued specifically for the period covered under Section 128A (FY 2017-18 to 2019-20).
v) The appellate authority or tribunal will take note of this request and continue proceedings or pass appropriate orders for the period other than that covered by Section 128A.
Withdrawal of Previous Guidance: The clarification previously issued under point 6 of the Table in para 4 of GST Circular 238/32/2024-GST (which likely required full withdrawal or payment) is now withdrawn.
Conclusion
This circular provides significant relief and clarity for taxpayers navigating demands related to the initial years of GST implementation. Eligibility for past GSTR-3B payments is confirmed, and a practical approach for handling multi-period demands is outlined, allowing taxpayers to selectively avail the Section 128A waiver without jeopardizing their appeal rights for other periods.
Disclaimer: This blog post is intended for informational purposes only and summarizes CBIC GST Circular 248/05/2025. It does not constitute legal or tax advice. For complete accuracy and official details, please refer to the original circular available on the CBIC website. E&OE.
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