The CBIC has issued Instruction No.02/2025-GST dated 07.02.2025, regarding Procedure to be followed in department appeal filed against interest and/or penalty only, related to Section 128A of the CGST Act, 2017.
Various doubts regarding the applicability of Section 128A have been clarified in Circular No. 238/32/2024-GST, dated 15th October 2024. Queries have been raised regarding whether the benefits of Section 128A can be extended in cases where the tax amount is fully paid, but the department has filed appeals due to:
- Arithmetic errors in interest calculation.
- Issues with penalty imposition, such as no penalty or penalties below prescribed thresholds.
Observations
As per S. No. 4 of the Table in Para 4 of Circular No. 238/32/2024-GST – Cases where the tax due has already been paid and the dispute pertains only to interest and/or penalty under Section 73 are eligible for the benefits of Section 128A. It has been clarified that taxpayers meeting the eligibility conditions of Section 128A should not be denied benefits due to mere technicalities, such as the department filing or intending to file an appeal.
Clarifications vide this Instruction – Taxpayers who have fully paid the tax amount demanded under Section 73 of the CGST Act but face disputes related to interest or penalties are eligible for Section 128A benefits. Such benefits should not be denied even if the department has filed the appeal or process of filing an appeal concerns Incorrect interest calculation or Incorrect imposition or non-imposition of penalties.
Further, Proper officers are instructed to withdraw appeals filed by the department in cases where taxpayers meet Section 128A conditions. In cases where orders under Section 73 are under review, proper officers may accept such orders if they meet the Section 128A criteria.
To read the complete Instruction https://taxo.online/wp-content/uploads/2025/02/ins-gst-02-2025.pdf
