The CBIC has issued Notification No. 11/2025 – Central Tax and Circular No. 248/05/2025-GST dated 27.03.2025 , to amend Rule 164 of the CGST Rules, 2017 which provides Procedure and conditions for closure of proceedings under section 128A in respect of demands issued under section 73. The Amendments relates to the procedures for availing waivers of interest and penalties for the period July 1, 2017 – March 31, 2020, and the handling of notices or orders relating to both eligible period as mentioned in Section 128A i.e. July 1, 2017 – March 31, 2020 and non-eligible periods i.e. other than July 1, 2017 – March 31, 2020 (for example demand for the FY 2020-21).

The Amendments provides as under:

A. Tax payment – where order/notice confirming is partly for the period for which no application under this scheme can be filed and partly for the period for which application under this scheme can be filed (Rule 164(4)):

Before amendment – If a Show Cause Notice or Order is issued containing demand partly for the period for which application under this scheme cannot be filed (say, demand for the FY 2020-21) and partly for the period for which application can be filed under Section 128A of the CGST Act (say, demand for the FY 2019-20), in such a case, taxpayer is eligible to file application under this scheme, only after payment of the full amount of tax demanded as per the Show Cause Notice or order is to be paid by the taxpayer on or before the due date prescribed.

After amendment – If a Show Cause Notice or Order is issued containing demand partly for the period for which application under this scheme cannot be filed (say, demand for the FY 2020-21) and partly for the period for which application can be filed under Section 128A of the CGST Act (say, demand for the FY 2019-20), in such a case, taxpayer is eligible to file application under this scheme, only after payment of full tax relating to specified period (i.e. period eligible under Section 128A July 1, 2017 – March 31, 2020). 

Further, No refund shall be granted for tax, interest, or penalty already paid before the enactment of the Second Amendment Rules, 2025, in cases where demand covers both eligible and ineligible periods.

Further, Circular No. 248/05/2025-GST also provided clarifications regarding Cases Where Demand Orders Cover Periods Inside and Outside Section 128A.

The Clarification provides as under:

• File an application under FORM SPL-01 or FORM SPL-02 as the case may be after making payment of the tax liability for the periods covered under section 128A. 
• Intimate the appellate authority or Tribunal, the intent to avail the benefit of Section 128A and that they does not intend to pursue the appeal for the period covered under the said Section i.e. FY 2017-18 to 2019-20.
• The appellate authority will then pass an order only for the period beyond FY 2017-18 to 2019-20.
• This Circular withdraws the previously issued clarification in this regard issued vide Circular No. 238/32/2024-GST (Point 6 of Table in Para 4)

B. Withdrawal of an appeal or writ Petition – where order/notice confirming is partly for the period for which no application under this scheme can be filed and partly for the period for which application under this scheme can be filed (Rule 164(7)):

After amendment – If a tax demand covers both eligible under Section 128A and ineligible periods, the taxpayer does not need to withdraw the entire appeal. However, the taxpayer can Inform the Appellate Authority or Tribunal that they intend to withdraw the appeal for the covered period. The appellate authority will then pass an order only for the period beyond FY 2017-18 to 2019-20. Also, The appeal shall be deemed withdrawn for the period July 1, 2017 – March 31, 2020, as per Section 128A(3).

C. Tax Payment through GSTR-3B Prior to November 1, 2024 (Clarification vide Circular 248/05/2025-GST)

It has been clarified that Payments made through GSTR-3B before November 1, 2024, will be considered valid for availing the benefit under Section 128A, subject to verification by the tax authorities. 

However, for payments made on or after November 1, 2024, taxpayers must follow the prescribed procedures under Rule 164 and make payments using GST DRC-03.

The complete Notification can be accessed at https://taxo.online/wp-content/uploads/2025/03/gst-ct-11-2025.pdf

The complete Notification can be accessed at https://taxo.online/wp-content/uploads/2025/03/Circular-No-248-05-2025.pdf