Rule 164 pertains to the waiver of interest and penalty as introduced in Section 128A, enacted through Section 146 of the Finance Act (No. 2), 2024 (Act No. 15 of 2024), dated August 16, 2024. The procedural guidelines for availing this benefit were notified under Notification No. 20/2024 – Central Tax, dated October 8, 2024, and outline the following:

Overview of Rule 164: Waiver of Interest and Penalty Under Section 128A

Eligibility for Waiver

1. Notices or Statements under Section 128A(1)(a):
   Taxpayers who have received notices/statements under Section 73(1) of the CGST Act, 2017 for the period July 1, 2017, to March 31, 2020, can apply for a waiver of interest, penalty, or both.
2. Orders under Section 128A(1)(b) and (c):
   Taxpayers who have received orders issued under:
   • Section 73(9): Order from a Proper Officer,
   • Section 107(11): Order from an Appellate Authority, or
   • Section 108(1): Order from a Revisional Authority, for the same period, can also apply for a waiver.

Application Process

• Form GST SPL-01:
  Used for waivers related to notices/statements under Section 128A(1)(a). The form must be filed within three months from the date notified under Section 128A (currently June 30, 2025, as the payment date is March 31, 2025).
• Form GST SPL-02:
  Used for waivers related to orders under Section 128A(1)(b) or (c). Filing deadlines are the same as above, except:
  • For cases covered under the first provision to Section 128A(1), the time limit extends to six months from the date of communication of the order.

Payment Requirements

1. Full Payment of Tax:
   • If the demand includes amounts unrelated to Section 128A(1), such as tax for erroneous refunds or other periods, full payment is required before application.
   • For ITC disallowance under Sections 16(5) or 16(6), the payable tax can exclude these amounts.
2. Payment via DRC-03 Only:
   • Payments must be made using Form DRC-03, credited to the electronic liability register.
   • If DRC-03 was filed before the order, Form DRC-03A must be used to create a debit entry.

Time Limits for Filing Applications

• General Deadline: Three months from the notified date under Section 128A(1)(a).
• Special Deadline: Six months from the communication of re-determination orders for cases under the first proviso to Section 128A(1).

Processing of Applications

• Notice to Applicant:
  The proper officer may issue Form GST SPL-03 within three months of receiving the application if ineligible.
• Reply by Applicant:
  Applicants must respond via Form GST SPL-04 within one month of receiving the notice.
• Final Order:
  • Approved applications: Form GST SPL-05.
  • Rejected applications: Form GST SPL-07.
• Time Limits for Issuing Orders:
  • No Notice Issued: Within three months of receiving the application.
  • Notice Issued: Within three months of reply submission or four months of notice issuance if no reply is filed.
• Deemed Approval:
  If no order is issued within the specified time, the application is considered approved.

Appeals Against Rejection

• Restoration of Withdrawn Appeals:
  If no appeal is filed against Form GST SPL-07, any original appeal withdrawn to apply under Section 128A will be restored.
• Appellate Authority’s Order:
  • If rejection is upheld, the original appeal is restored upon submission of Form GST SPL-08 within three months.
  • If the rejection is overturned, an approval order is issued in Form GST SPL-06.

Voiding of Waiver

• Non-Payment of Additional Tax: If not paid within the specified time, the waiver is void.
• Non-Payment of Interest/Penalty: The waiver is void if not paid within three months of the order.

Rule 164 – Conclusion

Rule 164 provides relief for taxpayers who defaulted unintentionally, though the process involves compliance with multiple forms and deadlines. Consulting a tax professional is advisable to navigate eligibility, application procedures, and conditions effectively. Timely adherence to provisions is critical for availing of this waiver.

Get a complete guide of Rule 164 and know everything about interest waivers and penalties under Section 128A with Pitchers Global.

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