1. Introduction
With the continuous evolution of the Goods and Services Tax (GST) regime, Section 128A of the Central Goods and Services Tax Act, 2017, was inserted to provide retrospective relief in the form of waiver of interest, penalty, or both arising under Section 73 for the period 1st July 2017 to 31st March 2020. This relief is a significant step towards dispute resolution and reducing litigation in the initial tumultuous years of GST implementation.
The Central Board of Indirect Taxes and Customs (CBIC), through Circular No. 248/05/2025-GST dated 27th March 2025, has addressed several representations from trade and industry regarding interpretational and procedural issues. This article provides a detailed professional perspective on the subject matter, incorporating statutory provisions, CBIC clarifications, and practical guidance.
2. Statutory Framework
2.1. Insertion of Section 128A
Section 128A was inserted vide the Finance Act, 2024 based on the recommendations of the 53rd and 54th GST Council meetings. The provision became effective from 1st November 2024. It allows waiver of interest and penalty, where tax demands under Section 73 (non-fraudulent cases) are raised for the specified period and certain conditions are fulfilled.
2.2. Rule 164 of the CGST Rules, 2017
To operationalize Section 128A, Rule 164 was inserted into the CGST Rules, 2017, outlining the procedure to avail the benefit under Section 128A, including filing of special forms SPL-01 and SPL-02, and payment methodology through Form DRC-03.
3. Scope and Objective of Section 128A
- Time Frame Covered: 1st July 2017 to 31st March 2020.
- Nature of Cases: Only cases under Section 73 – i.e., non-fraudulent tax short payment/non-payment, incorrect refund, or wrong ITC availment.
- Relief Provided: Waiver of interest and/or penalty, provided the entire tax amount is paid by the taxpayer under the specified mechanism.
The move is intended to provide closure for long-pending disputes arising from transitional issues, system glitches, and lack of clarity during the initial GST rollout.
4. Clarifications under Circular No. 248/05/2025-GST
The latest circular addresses two critical issues raised by stakeholders in relation to availing the benefit under Section 128A:
4.1. Issue 1: Eligibility in Case of Tax Paid via GSTR-3B Instead of DRC-03 (Before 1st Nov 2024)
Clarification:
- Payments made through GSTR-3B before 1st November 2024, even if not through DRC-03, are eligible for benefit under Section 128A, subject to proper officer’s verification.
- Post 1st November 2024, payment must mandatorily be made through Form DRC-03, in line with Rule 164(1) and (2).
- This is a welcome clarification, considering that many taxpayers had voluntarily discharged tax liabilities through GSTR-3B earlier but were unsure about benefit eligibility.
Practical Tip for Professionals:
Ensure documentary evidence and correspondence records clearly indicate that such GSTR-3B payments were made in discharge of Section 73 demands to establish intent.
4.2. Issue 2: Appeal Withdrawal in Case of Consolidated Orders Covering Mixed Periods
Scenario: Orders or appeals cover both eligible (2017-18 to 2019-20) and ineligible (post-March 2020) periods.
Clarification:
- Taxpayers can avail benefit under Section 128A only for the eligible period by making payment and filing Form SPL-01/SPL-02 accordingly.
- Need to inform appellate authority that they do not wish to pursue the appeal for the eligible period.
- The appellate body will pass orders for the remaining period based on merit.
This resolves confusion from earlier circular No. 238/32/2024-GST, where it was unclear whether full withdrawal of appeal was mandatory. Point 6 of that circular has now been withdrawn.
Professional Insight:
This partial withdrawal mechanism ensures taxpayers are not penalized for consolidated adjudications and retain their right to contest other periods.
5. Procedural Requirements Under Rule 164
To claim benefit under Section 128A, the following steps are mandatory:
| Step | Action |
|---|---|
| 1 | Discharge of full tax liability (as per show cause notice or adjudication order) for FY 2017-18 to 2019-20. |
| 2 | File Form DRC-03 for tax payment (if post 1st Nov 2024). |
| 3 | File SPL-01 (pre-adjudication) or SPL-02 (post-adjudication). |
| 4 | Withdraw relevant portion of appeal before authority/Tribunal, if any. |
| 5 | Maintain proper records and evidence of payment, filing, and intimation to appellate authorities. |
6. Compliance Considerations and Advisory for Professionals
- Thoroughly assess if the case qualifies under Section 73, not Section 74 (fraud/suppression).
- Segregate periods in demand orders or statements. Ensure only eligible periods are considered under 128A.
- Communicate with appellate authorities in writing while partially withdrawing appeals, citing Circular 248.
- Track timelines and notifications carefully, particularly around SPL form submissions and tax payment windows.
- Maintain audit trail for payments made via GSTR-3B prior to 1st November 2024.
7. Strategic Benefits for Taxpayers
- Litigation Avoidance: Reduces burden of prolonged appeals and litigation for older periods.
- Cost Saving: Waiver of interest and penalties can significantly lower the financial impact.
- Cash Flow Relief: Particularly helpful for MSMEs affected during the initial GST years.
8. Conclusion
Section 128A represents a progressive and pragmatic approach by the GST Council and CBIC towards resolution of legacy tax disputes. The latest Circular No. 248/05/2025-GST provides much-needed procedural clarity, especially concerning the form of payment and partial appeal withdrawal.
Professionals and taxpayers must act promptly to evaluate eligible cases, compile records, and ensure compliance with Rule 164 to avail the benefit within the prescribed timelines. This is an opportune moment to clean up past GST liabilities and start afresh with reduced compliance baggage.
9. Suggested Actions for CAs and Tax Consultants
- Identify eligible clients and cases proactively.
- Prepare standard checklists for documentation and procedural compliance.
- Conduct client webinars to spread awareness and ensure timely action.
- Coordinate with litigation teams to facilitate structured withdrawal of appeals.
Custom Checklist for Availing Benefit Under Section 128A of the CGST Act, 2017
Purpose: To assist in end-to-end compliance with Section 128A read with Rule 164, and the clarifications issued under CBIC Circular No. 248/05/2025-GST.
A. Preliminary Evaluation
| Task | Status |
|---|---|
| Identify demand raised under Section 73 (non-fraud cases) | ☐ |
| Confirm that the period of dispute is between 01.07.2017 to 31.03.2020 | ☐ |
| Ensure taxpayer is not under investigation for fraud or suppression (Section 74) | ☐ |
| Ascertain if appeal is filed and whether it includes periods outside eligible window | ☐ |
B. Tax Payment Verification
| Task | Status |
|---|---|
| Was tax already paid through GSTR-3B before 01.11.2024? | ☐ |
| If not paid earlier, pay tax now through Form DRC-03 | ☐ |
| Match payment amount to the tax demand under SCN or adjudication order | ☐ |
| Maintain proof of payment (Challan, DRC-03 acknowledgment, etc.) | ☐ |
C. Filing Required Forms
| Task | Status |
|---|---|
| If no adjudication yet: File Form SPL-01 post tax payment | ☐ |
| If order already issued: File Form SPL-02 post tax payment | ☐ |
| Retain acknowledgement copies of SPL forms filed | ☐ |
D. Appeal Management
| Task | Status |
|---|---|
| In case of pending appeal: Determine period covered in appeal | ☐ |
| Submit written intimation to appellate authority/Tribunal that taxpayer is withdrawing appeal for eligible period only | ☐ |
| Retain acknowledgment or copy of withdrawal submission | ☐ |
E. Documentation & Recordkeeping
| Task | Status |
|---|---|
| Maintain complete file including SCN/adjudication order, proof of payment, SPL form, withdrawal letter, and correspondence | ☐ |
| Ensure internal GST ledger reconciles with payment | ☐ |
| Communicate internally with accounting, legal, and compliance teams | ☐ |
F. Post-Compliance
| Task | Status |
|---|---|
| Track whether the appellate authority takes cognizance of partial withdrawal and passes revised order for remaining period | ☐ |
| Monitor CBIC updates for any further extensions or procedural changes | ☐ |
Stox N Tax 
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