Major Overhaul in GST Rule 164: Refund & Appeal Provisions Updated
In a significant move to streamline pending litigation and refund processes, the Central Board of Indirect Taxes and Customs (CBIC) has amended Rule 164 of the CGST Rules, 2017 via Notification No. 11/2025–Central Tax, dated March 27, 2025. These changes, effective immediately upon publication, aim to align the refund mechanism and appeal withdrawal procedures with Section 128A of the CGST Act.
Let’s decode what’s changed and how it impacts taxpayers and professionals alike.
🔍 What is Rule 164 and Why It Matters?
Rule 164 of the CGST Rules deals with special procedures for dealing with disputes, refund eligibility, and withdrawal of appeals in light of demand notices.
The amendments clarify when refund claims are not allowed and introduce flexibility in appeal withdrawals—a crucial move under the ongoing litigation reduction scheme.
🆕 Key Amendments Introduced (Effective March 27, 2025)
1. No Refund on Fully Paid Tax (Pre-2025 Cases)
New Explanation Added to Rule 164(4):
“No refund shall be available for any tax, interest, and penalty already paid for the period prior to these rules, where the demand notice includes periods covered and not covered under Section 128A.”
📌 Implication: If a taxpayer has already settled dues (tax + interest + penalty) for any period, no refund can be claimed now, even if part of that demand falls under the amnesty-like provisions of Section 128A.
2. Partial Appeal Withdrawal Allowed
New Proviso in Rule 164(7):
Taxpayers can now partially withdraw appeals only for the period covered under Section 128A (i.e., from 01.07.2017 to 31.03.2020), without affecting the rest of their appeal.
📌 How It Helps:
- Reduces litigation burden.
- Preserves right to appeal for periods beyond the specified range.
- Eases compliance under the new dispute resolution framework.
✅ Legal & Government Backing
- 📜 Section 128A, CGST Act: Introduced to allow conditional waiver of interest and penalty for old cases (2017–2020).
- 🧾 Notification No. 11/2025–Central Tax: Amendments grounded in authority under Section 164 of the CGST Act.
- 🏛️ Relevant Case Law: In Wipro Ltd. v. Commissioner of Central Tax (2023), the Supreme Court stressed the importance of clarity in tax demand notices, which the new rules now support.
🧾 Who Should Pay Attention?
These updates impact:
- Business Owners & CFOs: Evaluate pending GST appeals and refund applications.
- Tax Consultants & Advocates: Reassess litigation strategy based on partial withdrawal possibility.
- Freelancers & Professionals: Especially those with disputed GST dues from FY 2017–2020.
- E-commerce & SaaS Companies: More clarity on claim handling for pre-2020 dues.
📘 Frequently Asked Questions (FAQs)
❓ Can I still claim a refund for taxes paid before April 2025?
No, if taxes were fully paid for periods prior to 01.04.2025, refund is barred under the new rule.
❓ What is the benefit of partial appeal withdrawal?
It allows you to resolve only part of a dispute (pre-2020) and continue the rest of the case, saving time and compliance effort.
❓ Which periods are covered under Section 128A?
From 1st July 2017 to 31st March 2020.
❓ Is this change applicable automatically?
Yes, these rules are in force from 27th March 2025, per official Gazette notification.