– By Surbhi Premi and Kundan Kumar

The Government has finally laid on the table the long awaited amnesty scheme under GST Laws vide the Finance Bill, 2024. The purpose of the Government to introduce such scheme is mainly three folds namely (i) to reduce initial volume of pending cases before upcoming GSTATs (ii) to help the government garner revenue and (iii) to provide relief to the industry on account of uncertainties in the initial years of GST.

The scheme can be opted for any tax demands for the period pertaining to 1 st July 2017 to 31 st March 2020, or a part thereof, where the assessee pays the full amount of tax payable as per the notice or the order, on or before the notified date. Council has recommended 31 st March 2025 for this.

The categories of cases in respect of which amnesty scheme can be opted are as under:

i. SCN issued under Section 73 but demand not confirmed; or
ii. Demand confirmed under Section 73 but no order passed by the Appellate Authority or Revisional Authority; or
iii. Order passed by the Appellate Authority or Revisional Authority but no order passed by the Tribunal

Cases at notice stage, adjudication stage as well as appellate stage are covered, however, the scheme does not clearly provide for cases wherein matter is pending or order was passed by a superior court. Though the scheme casts an obligation on the taxpayer to withdraw appeal/writ, if any, pending at any forum, but no such obligation has been cast on the department. In other words, department is fully empowered to pursue its appeal/revision before any appellate forum
or court and if that results in additional demand of tax, the taxpayer has to pay the same within 3 months of such order.

Also Read

The scheme also clarifies that where a notice was issued under Section 74 (fraud cases), however, it is held by the Appellate Authority or Tribunal that it is a case of Section 73, benefit of amnesty scheme can be opted by the taxpayer before appointed date.

The scheme like any other amnesty scheme explicitly bars refund of interest and penalties already paid by the taxpayer.

With the announcement of the Amnesty scheme, certain transitional issues have arisen which need to be immediately addressed like the cases wherein order has been passed under Section 73 but the limitation period for filing appeal against such order expires before such amnesty scheme becomes operational. In such cases, if the taxpayer wants to close the matter by making payment of tax amount, the department may refuse to accept such payment as a payment under the
amnesty scheme and still proceed to initiate recovery of interest wherein the automatic recovery of interest is a highly contentious area. In case, the taxpayer wants to pay interest and penalty for now, the scheme does not permit refund under the scheme. The only practical way out with the taxpayer is to file an appeal and wait for the scheme to be notified wherein he will still be required to withdraw the appeal making the whole process a futile exercise.

Other unaddressed issues

  • Whether amnesty scheme can be opted where a single notice has been issued covering more than one issue; and the taxpayer wants to settle one issue under amnesty and litigate the other.
  • Whether amnesty scheme can be opted for the period pertaining to 1 st July 2017 to 31 st March 2020 wherein the notice under Section 73 is covering a larger period.
  • What if order holding the notice of 74(1) to be notice under 73 passed after the due date of availing benefit.
  • Whether amnesty scheme can be opted in case a single order passed for Section 73 and Section 74 and appeal / writ has been filed for the entire order.
  • The scheme does not provide any benefit to taxpayers who have paid tax amount voluntarily prior to issuance of notice under Section 73 but it is unclear whether benefit would be available in case wherein payment was made in pursuance of notice under Section 73 but before the amnesty scheme gets notified. The scheme does not address the cases wherein the notice under Section 73 is issued demanding interest and penalty amount alone.
  • Whether a payment under amnesty scheme be made through utilizing input tax credit or in cash?
  • Whether the payment can be made through the return so that the recipient can avail ITC?
  • Amnesty towards SGST component will be eventually addressed in the state finance bills. However, no corresponding amendment is proposed in UTGST and IGST Act which raises a concern as to applicability of the scheme for UTGST and IGST payment.

The proposed Amnesty scheme in the GST laws is a welcome move, however, it is imperative for the Government to carefully address the open issues before the scheme is actually implemented as it would go a long way to ensure its success.

(Surbhi Premi is Partner and Kundan Kumar is Principal Associate at Lakshmikumaran & Sridharan Attorneys.)

(Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.)