CBIC Introduces New Guidelines For GST Appeals On Interest & Penalty Waiver Under Section 128A

The Central Board of Indirect Taxes and Customs (CBIC) has issued Instruction No. 02/2025-GST, detailing procedures for departmental appeals focused solely on interest and penalties under Section 128A of the CGST Act, 2017.

The Board clarified that taxpayers who have fully paid the tax but are disputing only interest and/or penalties under Section 73 of the CGST Act are eligible for the benefits of Section 128A. It emphasized that the mere fact that the department has filed or is in the process of filing an appeal should not deprive an otherwise eligible taxpayer of these benefits. The intent of Section 128A is to reduce litigation, and taxpayers should not be denied relief due to procedural technicalities.

“it is decided that in cases where the tax amount has been fully paid by the taxpayer on demands made under section 73 of the CGST Act and the department is in appeal or under the process of filing an appeal only on account of wrong interest calculation and/or wrong imposition or non-imposition of penalty amount under the provisions of CGST Act or IGST Act and the taxpayer fulfils other conditions of section 128A and the rules made thereunder, the proper officer may proceed towards withdrawing such appeal filed and in case where the order under section 73 is under review stage only, accept the same.” the notification stated.

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