Section 128A GST: GSTR-3B Payments Eligible for Waiver, Says CBIC
The CBIC has issued Circular No. 248/05/2025-GST dated 27 March 2025, addressing industry concerns regarding the application of Section 128A of the CGST Act, 2017. This section allows taxpayers to claim waiver of interest and penalty for demands raised under Section 73 for the period 01.07.2017 to 31.03.2020, provided the conditions are met.
A key clarification: tax paid through GSTR-3B before 1st November 2024 is also eligible for this waiver benefit—resolving confusion over procedural compliance.
📘 Background: What is Section 128A?
Inserted by the Finance (No. 2) Act, 2024, Section 128A provides:
- A one-time opportunity to settle past demands (FY 2017–18 to FY 2019–20),
- Applicable to Section 73 cases (non-fraud),
- Waiver of interest, penalty, or both on fulfillment of specific conditions.
This provision was notified with effect from 1st November 2024, supported by Rule 164 of CGST Rules, 2017, and clarified earlier by Circular No. 238/32/2024-GST.
✅ Key Clarification 1: GSTR-3B Payments Are Valid (If Made Before 1 Nov 2024)
Issue Raised:
Whether payments made through GSTR-3B, instead of DRC-03, are valid for availing the Section 128A benefit.
CBIC Clarification (Para 4.1.4):
- If payment was made through GSTR-3B before 01.11.2024, and
- It was made against the demand raised under Section 73,
➡️ then such taxpayers are eligible for waiver under Section 128A.
However, from 1st Nov 2024 onward, taxpayers must use DRC-03 for payments under this provision, in accordance with Rule 164(2).
✅ Key Clarification 2: Mixed Period Appeals – Partial Withdrawal Allowed
Issue Raised:
What if a taxpayer received a consolidated notice/adjudication order that includes:
- Part of the period covered under Section 128A (FY 2017–20), and
- Part not covered?
CBIC Clarification (Para 4.2):
- Taxpayers can file SPL-01 or SPL-02 for the eligible period,
- Pay only for FY 2017–2020, as required under Rule 164(4) and its proviso,
- Inform the appellate authority that they wish to withdraw the appeal only for that eligible period.
The appellate authority will continue adjudication for the balance period.
🔁 Note: Earlier guidance in point 6 of Circular 238/32/2024-GST stands withdrawn to ensure clarity.
📝 Summary: What You Need to Do
| Scenario | Eligibility for Waiver | Action Required |
|---|---|---|
| Paid via GSTR-3B before 1 Nov 2024 | ✅ Eligible | Maintain records; proper officer to verify |
| Paying on or after 1 Nov 2024 | Only via DRC-03 | File DRC-03 as per Rule 164 |
| Mixed period orders | ✅ Eligible for FY 2017–2020 | File SPL-01/02; inform appellate authority for partial withdrawal |
🧾 Supporting Legal Framework
- Section 128A, CGST Act, 2017
- Rule 164, CGST Rules, 2017
- Circular No. 248/05/2025-GST, CBIC
- Circular No. 238/32/2024-GST (partially withdrawn)
🔁 FAQs Based on Common Queries
Q1. Is GSTR-3B payment valid for claiming Section 128A benefit?
Yes, only if made before 1 Nov 2024, and towards the demand raised under Section 73.
Q2. Can I partially withdraw my appeal under Section 128A?
Yes, if the order includes mixed periods, you can withdraw for FY 2017–2020 by filing SPL-01/02 and informing the authority.
Q3. Is DRC-03 mandatory?
Yes, for payments made on or after 1 November 2024 under Section 128A.
Q4. What if the demand was paid before the order was issued?
Such cases may still qualify, subject to verification and intent, as clarified by CBIC.
CBIC’s latest clarification under Circular 248/05/2025-GST removes procedural ambiguity around Section 128A and ensures that honest taxpayers are not penalized for past filing formats. This is a timely opportunity to settle pending issues for FY 2017–2020 under a favorable compliance window.