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).
In all these scenarios, if the taxpayer pays the full tax amount as per the notice or order, they will not be required to pay any interest or penalties.
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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