Frequently Asked Questions (FAQs)

1. What is Section 128A and why was it introduced?

Section 128A of the CGST Act allows for waiver of interest or penalty or both in respect of demands raised under Section 73 (relating to non-fraudulent cases)
for the financial years 2017-18, 2018-19, and 2019-20, provided certain conditions are met.

It was introduced to reduce litigation and provide relief to taxpayers by letting them settle their eligible demands by paying only the tax component and obtaining waiver of interest/penalty.

2. Which kinds of demands or situations are covered under Section 128A?

Section 128A covers:

1. Notices/Statements under Section 73 (no final order issued yet).
2. Orders under Section 73 where no further appeal or revisionary order has been issued (i.e., no order under Section 107(11) or Section 108(1)).
3. Orders by an appellate/revisional authority under Section 107(11) or Section 108(1), provided no order has been issued by the Appellate Tribunal under Section 113(1).
4. Cases where a notice was initially issued under Section 74, but subsequently, the demand is to be re-determined under Section 73 (as directed by an appellate
   authority, tribunal, or a court).

3. What is the last date to make full payment of tax to avail the waiver benefit under Section 128A?For normal cases, full payment of

• tax demanded must be made on or before March 31, 2025.
• For cases covered under the first
  proviso to Section 128A(1) (where Section 74 demand is converted into
  a Section 73 demand upon redetermination), the last date is within six
  months from the date of the redetermination order.
  

4. How does one apply for waiver under Section 128A?

1. Cases with notice/statement issued but no order yet (Section 73(1) or 73(3)):
   
   • File Form GST SPL-01 electronically on the common portal within three months from March 31, 2025 (i.e., by June 30, 2025), unless extended.
2. Cases with an order under Section 73 or an appellate/revisional order (Sections 107 or 108) but no tribunal order:
   
   • File Form GST SPL-02 electronically on the common portal within three months from March 31, 2025 (i.e., by June 30, 2025), unless extended.
3. Cases where Section 74 demand is re-determined as Section 73:
   
   • File Form GST SPL-02 electronically within six months from the date of the redetermination order.

 5. What if an appeal or writ petition is already pending against the relevant notice, statement, or order?

• You must withdraw the appeal or writ petition before filing Form GST SPL-01 or SPL-02.
• Proof of withdrawal (or a copy of the withdrawal application, if final order of withdrawal is not yet available) must be attached with your waiver application.
• Once the final withdrawal order is received, upload it on the common portal within one month of such withdrawal.

6. Do I need a separate application for each notice/statement/order covering FY 2017-18 to 2019-20?

Yes. If you have multiple demands (i.e., multiple notices/statements/orders), each demand requires a separate Form GST SPL-01 or Form GST SPL-02 (as
applicable).

7. How should the tax be paid for availing waiver under Section 128A?

• Unadjudicated Notices (covered by Section 73(1)/(3) with no order yet):
  
  • Pay the tax demanded via Form GST DRC-03.
• Adjudicated Demands (where an order has been issued):
  
  • Pay by debiting the Part II of Electronic Liability Register (ELR) against the specific demand order.
  • If you have already paid partly or fully via Form GST DRC-03, you must first file Form GST DRC-03A to adjust the previously paid amount against the demand entry in ELR-Part II.
  • The date of payment will be considered the date on which you actually paid through Form GST DRC-03, not the date of its adjustment via DRC-03A.

8. What if the notice/statement/order demands tax on account of contravention of Section 16(4) (time limit for claiming ITC) which is now reversed retrospectively?

• With the retrospective insertion of sub-sections (5) & (6) to Section 16, taxpayers can deduct the tax portion related solely to the contravention of Section 16(4) if
  such ITC is now valid.
• No separate rectification application is needed for availing this retrospective benefit, as clarified by Notification No. 22/2024–Central Tax.
• Ensure that the deduction is only for amounts disallowed exclusively because of Section 16(4) time-limits (not for any other disallowance reason).
  

9. Can I partially pay the demand and avail a partial waiver of interest or penalty?

No. Section 128A requires full payment of the tax component demanded for the specified periods (FY 2017-18, 2018-19, 2019-20). Partial payment does not entitle you to partial waiver of interest/penalty.

10. What if the notice/statement/order spans multiple tax periods, some covered by Section 128A, some not?

• You must pay the full tax demanded (covering all periods in that notice).
• Waiver of interest or penalty applies only to the portion of demand relating to the eligible periods (FY 2017-18, 2018-19, 2019-20).
• Any interest or penalty related to other periods remains payable and must be settled within three months of the waiver order (Form GST SPL-05 or SPL-06);
  otherwise, the granted waiver becomes void.
  

11. What about demands that also include erroneous refunds?

• If a single notice/statement/order includes a demand for erroneous refunds plus demands for tax periods from FY 2017-18 to 2019-20, you must pay the entire tax amount,
  including the portion attributable to the erroneous refund, before applying for waiver under Section 128A.
• The waiver of interest or penalty applies only to the tax demand for the eligible periods. The penalty and interest related to the erroneous refund remain payable.

12. How will my application for waiver be processed by the tax authorities?

1. Submission of Application:
   
   • Form GST SPL-01 (unadjudicated notice) or
   • Form GST SPL-02 (adjudicated order or re-determined demand), along with necessary documents.
2. Examination by Proper Officer:
   
   • If there is any reason for rejection, the officer issues a notice in Form GST SPL-03 within 3 months of receiving your application, offering you a personal hearing.
3. Reply by Applicant:
   
   • You must submit your reply (Form GST SPL-04) within 1 month of receiving the SPL-03 notice.
4. Order:
   
   • If found eligible, the officer issues an order in Form GST SPL-05 (or SPL-06 if issued by the appellate authority), confirming the waiver.
   • If found ineligible, the officer rejects your application via Form GST SPL-07. This rejection is appealable under Section 107.
5. Deemed Approval:
   
   • If no order is passed within the prescribed time, your application is deemed approved, and Form GST SPL-05 is automatically generated on the portal.
     

13. Can I appeal if my waiver application (Form GST SPL-02/SPL-01) is rejected?

• Yes.
  Rejections in Form GST SPL-07 can be appealed to the Appellate Authority under Section 107, provided you adhere to the time limits.
• No new pre-deposit is typically required if you have already paid the full tax demanded under the original notice/order. However, if your initial tax
  payment was less than the standard pre-deposit, you must pay the difference as pre-deposit.

14. What happens if the department has filed an appeal for an enhanced tax demand but I already got a waiver order?

• The second proviso to Section128A(1) stipulates that if the department’s appeal leads to a higher tax liability, you must pay that additional tax within 3
  months of the appellate authority/tribunal/court/revisional order.
• Failing to pay within 3 months renders your earlier waiver order (Form GST SPL-05 or SPL-06) void.
  

15. Is the waiver also available for IGST and Compensation Cess demands raised under Section 73?

• Yes.
  By virtue of Section 20 of the IGST Act and Section 11 of the GST (Compensation to States) Act, any demands under Section 73 for IGST or Compensation Cess can also avail the Section 128A waiver.
• Full payment includes CGST, SGST, IGST, and compensation cess demanded.

16. Does Section 128A cover cases of wrong transitional credit (TRAN credit)?

• Yes,
  if the transitional credit was availed during FY 2017-18, 2018-19, or 2019-20 and a Section 73 notice was issued for wrongly availed credits.
• You must pay the demanded (valid) tax portion as per the procedure, and if other conditions are met, you can avail the waiver.
  

17. Does the waiver cover penalties under other provisions of the CGST Act (e.g., Section 122, Section 125)?

• Yes
  if those penalties are part of the Section 73 demand notice/order, they are covered under the Section 128A waiver.

·        
No waiver is available for late fees, redemption fines, or interest on self-assessed liability directly recoverable under Section 75(12) (like interest is due to delayed filing of returns or delayed reporting of any supply)

18. Can I use my Input Tax Credit (ITC) to pay the demanded tax for availing the waiver?

• Yes.
  The payment of tax demanded can be made by debiting the electronic credit ledger, the electronic cash ledger, or both.
• However, for demands involving:
  
  • Reverse Charge Mechanism (RCM) liability, or
  • Erroneous refunds paid in cash, the payment must be made only in cash (electronic cash ledger).
    

19. Is the waiver available for IGST payable on imports under the Customs Act, 1962?

• No.
  If the IGST demand is raised under the Customs Act, it is not covered by Section 73 of the CGST Act. Section 128A waiver applies only
  to demands raised under the CGST Act.

20. If I have already paid (fully or partially) through Form GST DRC-03 but now the demand order is in ELR-Part II, do I need Form GST DRC-03A?

• Yes.
  In adjudicated cases (demand order already issued), you must file Form GST DRC-03A to adjust the tax you have already paid via
  DRC-03 against the specific demand entry.
• This adjustment is necessary before you file Form GST SPL-02 for waiver.
  

21. What if my application for waiver (Form GST SPL-02) is rejected, and I had already withdrawn my original appeal?

• If your application is rejected by an order in Form GST SPL-07, you can appeal against this rejection.
• If the appellate authority upholds the rejection, you may restore your original appeal, provided you file an undertaking in Form GST SPL-08 that you do not
  intend to appeal further against that appellate decision.
• If the appellate authority overturns the rejection and grants the waiver (via Form GST SPL-06), then no further appeal lies against that new waiver order.

Conclusion

Section 128A of the CGST Act offers a significant one-time relief opportunity for taxpayers burdened by interest and penalty components related to past demands (FY 2017-18 to FY 2019-20). By following the procedures set out in Rule 164 and meeting the conditions (including full tax payment, withdrawal of pending appeals, and timely submission of forms), eligible taxpayers can conclude their disputes cost-effectively.

Disclaimer: This article is a summarized guide based on Circular No. 238/32/2024-GST, dated October 15, 2024, and relevant provisions of GST Law.

For exact legal language and complete details, please refer to the CGST Act, CGST Rules,  and the official notifications/circulars issued by the CBIC.