Section 128A of the Central Goods and Services Tax Act, 2017 provides a one-time waiver of interest or penalty or both in respect of certain tax demands raised under Section 73 for the initial years of GST implementation.
This provision was introduced through the Finance (No. 2) Act, 2024 and brought into force with effect from 1 November 2024. It was designed to provide relief in specified cases relating to the financial years 2017-18, 2018-19 and 2019-20, where the taxpayer pays the full amount of tax covered by the eligible demand within the prescribed time and satisfies the other conditions.
Section 128A is particularly important because it distinguishes between the tax amount itself and the additional liability represented by interest and penalty. The section does not provide a general waiver of GST tax. Instead, subject to its conditions, it provides a waiver of interest or penalty or both relating to eligible Section 73 demands.
What Is Section 128A of the CGST Act?
Section 128A is titled “Waiver of interest or penalty or both relating to demands under section 73.”
It was introduced as a special relief measure for certain demands relating to the initial GST years.
The GST Council recommended the provision to address disputes and demands relating to FY 2017-18, FY 2018-19 and FY 2019-20, subject to payment of the full tax amount within the notified time. The Council specifically considered that the initial years of GST involved frequent changes and evolving compliance procedures.
Which Financial Years Are Covered?
Section 128A covers eligible demands relating to the period from 1 July 2017 to 31 March 2020, which corresponds to:
- FY 2017-18
- FY 2018-19
- FY 2019-20
The provision does not create a general waiver for later financial years.
The GST Council’s recommendations and the subsequent statutory framework specifically identified these three financial years.
What Relief Does Section 128A Provide?
The main relief is waiver of:
- interest;
- penalty; or
- both interest and penalty,
subject to the conditions of Section 128A.
The tax demanded must be paid. Section 128A is therefore not a waiver of the principal tax demand.
A taxpayer cannot simply request cancellation of the tax liability under this section. The benefit is linked to payment of the eligible tax amount within the prescribed period.
Section 128A and Section 73
Section 73 deals with determination of tax not paid, short paid, erroneously refunded or input tax credit wrongly availed or utilised for reasons other than fraud, wilful misstatement or suppression of facts to evade tax.
Section 128A was specifically created for certain demands arising under Section 73.
The GST Council expressly distinguished these cases from demands involving fraud, wilful misstatement or suppression of facts that were originally dealt with under Section 74.
Which Section 73 Cases Can Be Covered?
CBIC Circular No. 238/32/2024-GST explains that Section 128A can apply to specified cases where:
- a notice under Section 73(1) or statement under Section 73(3) has been issued but no order under Section 73(9) has been issued;
- an order under Section 73(9) has been issued but no order has been issued by the Appellate Authority or Revisional Authority under Section 107(11) or Section 108(1); or
- an order has been issued by the Appellate Authority or Revisional Authority under Section 107(11) or Section 108(1), but no order has been passed by the Appellate Tribunal under Section 113(1).
The demand must otherwise satisfy the financial-year and payment conditions of Section 128A.
Section 74 Cases That Can Subsequently Become Eligible
There is an important exception for certain cases that originally arose under Section 74.
Suppose a notice was issued under Section 74 for FY 2017-18, 2018-19 or 2019-20.
During appeal or court proceedings, it may be concluded that the allegations of fraud, wilful misstatement or suppression of facts are not established. Under Section 75(2), the tax can then be required to be determined under Section 73.
CBIC has clarified that such cases can be covered by Section 128A, subject to the other statutory conditions.
What Is the Payment Condition?
The most important condition is payment of the full amount of tax payable according to the eligible notice, statement or order.
For the original Section 128A mechanism, 31 March 2025 was notified as the date on or before which the full tax demanded had to be paid for the relevant cases.
For cases covered by the first proviso to Section 128A(1), where tax is redetermined under Section 73 after an earlier Section 74 proceeding, the notified period was six months from the date of the redetermination order.
Does Section 128A Waive the Tax?
No.
This is one of the most important points.
Section 128A does not provide a general waiver of the tax demanded under Section 73.
The taxpayer must pay the eligible tax amount according to the applicable notice, statement or order.
The relief concerns interest and penalty, subject to the statutory conditions.
What About Erroneous Refunds?
The Section 128A relief was not intended to cover demands relating to erroneous refunds.
The GST Council specifically recommended that demands involving erroneous refunds should be excluded from the waiver mechanism.
Therefore, taxpayers should carefully identify the nature of the demand before assuming that Section 128A applies.
What If Interest and Penalty Have Already Been Paid?
The GST Council’s framework specifically provided that where interest and penalty had already been paid in respect of the eligible demand, refund of those amounts would not be available merely because of Section 128A.
Therefore, Section 128A should not be understood as a general refund mechanism for interest or penalties already paid.
Rule 164 and Section 128A
Section 128A provides the statutory relief, while Rule 164 of the CGST Rules provides the procedure and conditions for implementing the relief.
Rule 164 was inserted with effect from 1 November 2024. The GST Council recommended the rule along with prescribed forms for implementation of Section 128A.
The procedural framework included specific forms for applications and orders relating to the waiver.
Forms Introduced for Section 128A
The implementation framework introduced forms including:
- FORM GST SPL-01
- FORM GST SPL-02
- FORM GST SPL-03
- FORM GST SPL-04
- FORM GST SPL-05
- FORM GST SPL-05A
- FORM GST SPL-06
- FORM GST SPL-07
These forms are part of the Rule 164 procedure for implementing Section 128A.
👉 Read More → Section 133 – Liability of officers and certain other persons
Example of Section 128A
Suppose a taxpayer received a Section 73 demand for FY 2018-19 containing:
- Tax: ₹5,00,000
- Interest: ₹1,20,000
- Penalty: ₹50,000
If the case satisfies all conditions of Section 128A and the taxpayer pays the full eligible tax within the prescribed period, the statutory benefit can result in waiver of the eligible interest and penalty.
The taxpayer does not receive a waiver of the ₹5,00,000 tax merely because Section 128A applies.
Example – Section 74 Converted to Section 73
Suppose a taxpayer originally received a Section 74 notice for FY 2019-20.
During appellate proceedings, the allegation of fraud or suppression is not established and the matter is required to be dealt with under Section 73 pursuant to Section 75(2).
If the other conditions are satisfied, the resulting Section 73 demand can fall within the Section 128A framework. CBIC has specifically clarified this situation.
Section 128A and Appeals
The stage of the demand is important.
The provision covers specified situations involving:
- a Section 73 notice or statement;
- a Section 73 order;
- an appellate or revisional order; and
- cases where no specified subsequent order has yet been passed.
Therefore, taxpayers should examine the complete litigation history of the demand rather than looking only at the original notice.
Section 128A and Payment of Tax Already Made
A taxpayer may have already paid the tax amount while interest and penalty remain disputed.
CBIC later clarified that where the tax amount has been fully paid and the remaining dispute concerns only interest or penalty, eligible taxpayers should not be denied the Section 128A benefit merely because the Department has filed or is in the process of filing an appeal concerning interest or penalty, provided the other conditions are fulfilled.
This clarification is important for cases where the principal tax liability has already been discharged.
Is Section 128A a Permanent Waiver Scheme?
No.
Section 128A is a special statutory relief provision linked to specified historical periods and specified Section 73 demands.
It should not be treated as a permanent provision under which future Section 73 demands can automatically receive waiver of interest or penalty.
Its principal purpose was to address eligible historical demands from the initial GST period.
Section 128A vs Section 128
The two provisions should not be confused.
| Basis | Section 128 | Section 128A |
|---|---|---|
| Main subject | Waiver of specified penalties or late fee | Waiver of interest or penalty or both |
| Nature | General enabling power through notification | Special statutory relief for specified historical Section 73 demands |
| Period | Depends on notification | FY 2017-18, 2018-19 and 2019-20, subject to conditions |
| Tax demand | Not a general tax waiver | Full eligible tax must be paid |
| Procedure | Notification-based | Section 128A + Rule 164 |
Section 128A vs Section 73
Section 73 is the demand and adjudication provision for specified non-fraud cases.
Section 128A is a special relief provision connected with eligible Section 73 demands.
Therefore:
Section 73 → Determines the tax demand
Section 128A → Provides specified waiver of interest/penalty if conditions are satisfied
Section 128A vs Section 74
Section 74 deals with demands involving fraud, wilful misstatement or suppression of facts to evade tax, for the periods to which Section 74 applies.
Section 128A was designed primarily for Section 73 demands and does not generally waive interest or penalty for ordinary Section 74 cases.
However, where a Section 74 case is subsequently required to be determined under Section 73 because the fraud-related allegations are not established, it can potentially come within Section 128A if the other conditions are fulfilled.
Important Points to Remember
- Section 128A provides a special waiver of interest or penalty or both.
- It relates to specified demands under Section 73.
- It covers FY 2017-18, 2018-19 and 2019-20.
- The provision came into force on 1 November 2024.
- It does not waive the principal tax amount.
- Full eligible tax payment is a key condition.
- The original payment deadline notified for the main cases was 31 March 2025.
- Special treatment applies to certain cases redetermined under Section 73 after Section 74 proceedings.
- Erroneous refund demands are excluded from the intended waiver.
- Interest and penalty already paid are generally not refundable merely because of Section 128A.
- Rule 164 provides the implementation procedure.
- Various GST SPL forms were prescribed for the scheme.
- The taxpayer must examine the exact stage and history of the demand.
- Section 128A should not be confused with Section 128.
- Section 128A is different from the general demand provisions under Sections 73 and 74.
- CBIC has issued detailed clarification through Circular No. 238/32/2024-GST.
👉 Read More → Section 131 – Confiscation or penalty not to interfere with other punishments
Conclusion
Section 128A was introduced as a special relief mechanism for certain historical GST demands arising under Section 73 for FY 2017-18, 2018-19 and 2019-20. Its central objective was to allow eligible taxpayers to obtain waiver of interest or penalty or both after satisfying the statutory condition of paying the full eligible tax amount within the prescribed time.
The provision does not waive the underlying tax demand and does not operate as a general amnesty for all GST liabilities. Its application depends on the nature and stage of the Section 73 proceedings, the relevant financial year, payment of the eligible tax and the other conditions prescribed under Section 128A and Rule 164.
The provision also contains an important mechanism for certain cases originally initiated under Section 74 but subsequently required to be determined under Section 73 because fraud, wilful misstatement or suppression of facts was not established. CBIC has clarified the treatment of such cases.
Section 128A should therefore be understood as a specific, conditional and historical relief provision, rather than a general waiver of GST interest and penalties.
Based on Google's Helpful Content System, this article emphasizes user value, transparency, and accuracy. It incorporates principles of E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness).
Why Choose Sarkari Bakery?
Official Information
Government schemes & banking information based on official sources.
Step-by-Step Guides
Simple application process explained for every service.
Regular Updates
Content updated whenever official rules or services change.
People-First Content
Helpful, transparent and user-focused content.