Finance Ministry Announces GST Amnesty Scheme for Appealing Against Demand Notices

The Central Board of Indirect Taxes and Customs has introduced an amnesty scheme that allows taxpayers more time to file appeals regarding GST demand notices. Taxpayers now have until January 31, 2024, to file such appeals.

This initiative aligns with the decisions made during the 52nd Goods and Services Tax Council meeting. To take advantage of this opportunity, taxpayers must make a pre-deposit payment of 12.5% of the disputed tax amount. Of this amount, at least 20% (equivalent to 2.5% of the disputed tax) must be debited from the electronic cash ledger, which may impact a company's working capital.

The amnesty scheme is for those who could not appeal under Section 107 of the CGST Act, 2017, against a demand order (Section 73 or 74 of the same Act) issued on or before March 31, 2023. It also includes cases where appeals were rejected just because they were filed late.

You can file an appeal against orders that involve tax liability along with interest and penalties, but not for cases that only have interest, fines, and penalties. 

Sections 73 and 74 come into play when the tax department identifies tax shortfalls, non-payment, wrong refund of input tax credit, or alleges "wilful misstatement or suppression of facts." Previously, the law allowed taxpayers to appeal within three months of the tax officer issuing a demand order, and now they have an extra month for this.

The anticipation for the appeals amnesty scheme was high, particularly due to the new process and the rejection of appeals for late filing. Various High Courts had different stances on accepting appeals beyond the statutory time limits. This amnesty scheme is a relief for all taxpayers as long as the adjudication order is issued before March 31, 2023.

The amnesty scheme does not cover assessment orders made under Sections 62, 63, and 64. This might be intentional since these orders primarily affect individuals or businesses that should be registered or are not filing returns.

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