Benefit of Amensty Schement if Order is only for interest and penalty

[Abhijeet Mane]

Hi Team,

Can we apply for the benefit of amnesty scheme under GST- if the order only contains the demand for interest and penalty. (I.e., for Tax paid on secondment of employees)

[Sadanand Bulbule]

Dear Sir

In terms of Section 128A of the CGST Act, the amnesty scheme applies exclusively in respect of demand of "any amount of tax payable" in pursuance of an order/notice issued under Section 73 and it is due as on 01/11/2024. So in your case admittedly tax is already paid before such amnesty scheme was effectively in place. Therefore the benefit of amnesty scheme is not applicable to the order demanding only interest & penalty.

In simple words, there shall be an order or notice under Section 73 demanding tax, interest and penalty together to enjoy the benefit of amnesty scheme upon payment of such tax amount. Otherwise no.

[Abhijeet Mane]

Question No 4 of  of Circular Circular No. 238/32/2024-GST states that "Where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved, the same shall be considered for availing the benefit of section 128A."

[Sadanand Bulbule]

Dear Sir

Your understanding is right. But there is a rider:

Where the tax due has already been paid and the notice or demand orders under Section 73 only pertains to interest and/or penalty involved, the same shall be considered for availing the benefit of section 128A.

However, the benefit of waiver of interest and penalty shall not be applicable in the cases where the interest has been demanded on account of delayed filing of returns, or delayed reporting of any supply in the return, as such interest is related to demand of interest on self-assessed liability and does not pertain to any demand of tax dues and is directly recoverable under sub-section (12) of section 75.

If your case does not fall under the above proviso [underlined],you are entitled for the benefit of amnesty scheme. Double check the facts.

AI Summary

Amnesty for GST interest and penalty available where tax already paid, subject to delayed filing exclusion. The amnesty targets outstanding tax payable due as on the scheme cut off; if tax has been paid and an assessment notice demands only interest and/or penalty, such cases are considered for amnesty relief. However, waiver of interest and penalty is excluded where interest arises from delayed filing or delayed reporting of supplies because that interest is treated as recovery of self assessed liability and is directly recoverable under the provision governing self assessed interest. Taxpayers whose interest/penalty demands do not fall within that exclusion may avail the amnesty after factual verification.