GST Section 128A Waiver and Form SPL-01 Guide

TL;DR

Section 128A of the Central Goods and Services Tax (CGST) Act provides a complete waiver of interest and penalties for tax demands raised under Section 73 for Financial Years 2017-18, 2018-19, and 2019-20. To qualify, taxpayers must pay the full demanded principal tax amount on or before 31 March 2025 (or the notified statutory deadline) and submit Form GST SPL-01 or Form GST SPL-02 on the GST portal. Any pending appeal or writ petition against the demand must be withdrawn prior to applying.

Quick Answer: What Does Section 128A Offer?

Section 128A waives 100% of accumulated interest under Section 50 and penalties under the CGST and Gujarat Goods and Services Tax (GGST) Acts for notices or orders issued under Section 73 (non-fraud cases) covering FY 2017-18, FY 2018-19, and FY 2019-20. If your business received a show-cause notice in Form GST DRC-01 or an adjudication order in Form GST DRC-07 under Section 73, you only need to pay the core tax component. The department writes off the interest and penalties once you file Form GST SPL-01 (for notices) or Form GST SPL-02 (for orders) and the proper officer issues an order in Form GST SPL-05.

Legal Background: Finance (No. 2) Act 2024 and Rule 164

The GST Council in its 53rd and 54th meetings recommended introducing a targeted conditional waiver scheme to settle legacy disputes from the initial implementation years of GST. Following this recommendation, Parliament inserted Section 128A into the CGST Act through Section 146 of the Finance (No. 2) Act, 2024 (Act No. 15 of 2024).

The Ministry of Finance notified the key statutory machinery governing this provision:

• Notification No. 20/2024-Central Tax (dated 8 October 2024) appointed 1 November 2024 as the date on which Section 128A came into legal force.
• Notification No. 21/2024-Central Tax (dated 8 October 2024) inserted Rule 164 into the Central Goods and Services Tax Rules, 2017, prescribing the procedure, verification timelines, and electronic forms (SPL-01 through SPL-08).
• Circular No. 238/32/2024-GST (dated 15 October 2024) issued administrative clarifications regarding partial demand settlements, appeal withdrawal verifications, and electronic ledger payment adjustments.

The Gujarat State Legislature enacted parallel amendments under the Gujarat Goods and Services Tax Act, ensuring identical relief across both Central and State GST jurisdictions in Gujarat.

Key Definitions Under the GST Amnesty Scheme

Section 128A

A statutory provision providing a conditional waiver of interest and penalty payable on tax demands adjudicated or initiated under Section 73 for FY 2017-18, 2018-19, and 2019-20.

Section 73

Determination of tax not paid, short paid, or input tax credit wrongly availed or utilized, for any reason other than fraud, wilful misstatement, or suppression of facts.

Form GST SPL-01

The electronic application form on the GST common portal to claim waiver where only a notice (Form GST DRC-01) or statement (Form GST DRC-02) has been issued, but no final order has been passed.

Form GST SPL-02

The electronic application form to claim waiver where an adjudication order (Form GST DRC-07) or appellate order has already been passed under Section 73.

Form GST SPL-05

The final order issued by the Proper Officer accepting the application and concluding all proceedings related to the notice or order.

Rule 164

The procedural rule in the CGST and GGST Rules governing application filing, documentary evidence, verification, defect notices, and conclusion orders for Section 128A.

Who Is Eligible for the Section 128A Waiver?

Section 128A applies exclusively to specific categories of tax demands. To claim the benefit, your case must fall into one of the following four scenarios:

1. Notice Issued, No Order Passed: A show-cause notice was issued under Section 73(1) or a statement was issued under Section 73(3) for FY 2017-18, 2018-19, or 2019-20, and the adjudicating authority has not yet passed an order under Section 73(9).
2. Adjudication Order Passed, No Appeal Filed: An order under Section 73(9) was passed by the adjudicating authority creating a tax demand, and the period for filing an appeal has either expired or the taxpayer chooses not to contest the tax.
3. Appellate Order Passed: An order was passed by the Appellate Authority under Section 107(11) or the Appellate Tribunal under Section 112(1) confirming a demand under Section 73, and no further judicial appeal has been decided against the taxpayer.
4. Section 74 Notices Remanded to Section 73: A notice originally issued under Section 74 (fraud allegations) where an appellate authority, tribunal, or court directed re-determination under Section 73 under Section 75(2) of the Act.

What Is Strictly Ineligible?

Section 128A does not grant blanket immunity to all GST notices. The waiver is not available for:

• Demands initiated or confirmed under Section 74 where fraud, suppression of facts, or wilful misstatement is established.
• Demands concerning erroneous refunds granted to the taxpayer.
• Demands for Financial Years outside the notified window (e.g., FY 2020-21, 2021-22, or later).
• Any interest or penalties already paid before the date of application (no refunds are granted for previously settled interest or penalties under Section 128A(2)).

Section 73 vs Section 74: Eligibility Comparison

Understanding whether your demand falls under Section 73 or Section 74 is the single most critical factor in determining your eligibility:

Feature	Section 73 (Eligible)	Section 74 (Ineligible)
Grounds of Demand	Bona fide mistake, calculation error, delayed return, unintentional ITC mismatch	Fraud, wilful misstatement, or suppression of facts to evade tax
Statutory Coverage	Covered under Section 128A	Excluded from Section 128A
Interest Relief	100% waiver of interest under Section 50	No waiver; 18% per annum mandatory
Penalty Relief	100% waiver of penalty under Section 73(9)	No waiver; penalty up to 100% of tax
Application Form	Form GST SPL-01 or Form GST SPL-02	Not applicable
Pre-Condition	Payment of 100% principal tax	Full tax + full interest + full penalty
Applicable Financial Years	FY 2017-18, 2018-19, and 2019-20	Any period

Why Section 128A Is Crucial for Gujarat Businesses

Gujarat represents one of India’s most industrially vibrant and transaction-dense states. Between 2017 and 2020, small and mid-sized enterprises across Gujarat adapted to the new GST network while managing transition credit (TRAN-1/TRAN-2), E-Way bill implementation, and continuous changes in return formats.

Consequently, thousands of Section 73 notices were issued across Gujarat commissionerates:

• Textiles & Apparel (Surat and Ahmedabad): Inverted duty structure disputes, fabric-to-garment ITC adjustments, and GSTR-2A versus GSTR-3B monthly mismatches resulted in substantial Section 73 demand notices.
• Chemicals & Petrochemicals (Vadodara, Bharuch, and Ankleshwar): Scrutiny on capital goods ITC, inter-plant stock transfers, and delayed input credit claims.
• Engineering & Foundry Units (Rajkot and Jamnagar): MSME job-work valuation disputes and delayed GSTR-3B filings that triggered automated interest notices.
• Ceramics & Tiles (Morbi and Himmatnagar): Raw material ITC disallowance from unregistered suppliers during the early composition transition phases.
• Maritime & Agro-Processing (Bhavnagar, Mundra, and Anand): Export documentation verification, terminal handling ITC reconciliations, and mandi purchase documentation gaps.

Because GST interest runs at 18% per annum compounded, a demand dating back to FY 2017-18 carried accrued interest exceeding 100% to 125% of the original tax by late 2024. For a Gujarat manufacturer facing a ₹25 lakh demand, the interest and penalty exceeded ₹30 lakh. Section 128A eliminates that entire secondary burden.

Worked Example: Tax Saved Under Section 128A

Consider a medium-sized textile machinery parts manufacturer based in Rajkot, Gujarat. The business received an adjudication order (Form GST DRC-07) dated 12 December 2023 under Section 73 for Financial Year 2017-18 due to a mismatch between GSTR-2A and GSTR-3B input tax credit.

Case Details

• Demand Period: FY 2017-18 (April 2017 – March 2018)
• Principal Tax Disallowed: ₹10,00,000 (IGST ₹6,00,000 + CGST ₹2,00,000 + SGST ₹2,00,000)
• Interest Levied under Section 50: ₹11,70,000 (calculated at 18% per annum over ~6.5 years)
• Penalty Levied under Section 73(9): ₹1,00,000 (10% of tax amount)
• Total Amount Demanded by Department: ₹22,70,000

Comparison: Standard Adjudication vs Section 128A Settlement

Payment Component	Normal Adjudication / Appeal	Under Section 128A Scheme	Net Savings
Principal Tax	₹10,00,000	₹10,00,000	₹0
Interest (Section 50)	₹11,70,000	₹0 (100% Waived)	₹11,70,000
Penalty (Section 73)	₹1,00,000	₹0 (100% Waived)	₹1,00,000
Total Cash Outflow	₹22,70,000	₹10,00,000	₹12,70,000

By utilizing Section 128A and filing Form GST SPL-02, the Rajkot enterprise saves ₹12,70,000 in cash outflow—an amount larger than the original tax in dispute—while bringing final legal closure to an 8-year-old dispute.

You can verify your current tax and interest liability using our GST calculator or cross-reference your ongoing filings through our GST compliance guide.

Pre-Requisites Before Filing Form GST SPL-01 or SPL-02

Before logging onto the GST common portal, complete this compliance checklist:

• Verify the SCN or Order Section: Confirm the demand was issued under Section 73 (or converted to Section 73 under Section 75(2)). Check the reference number on your DRC-01 or DRC-07.
• Confirm Financial Year: The tax period must fall strictly between 1 July 2017 and 31 March 2020 (FY 2017-18, FY 2018-19, or FY 2019-20).
• Calculate Net Tax Due: Verify any previous payments made through Form GST DRC-03 or monthly GSTR-3B filings against this specific notice.
• Pay the Remaining Principal Tax: Discharge 100% of the demanded tax using the Electronic Cash Ledger or Electronic Credit Ledger (subject to Section 49 restrictions).
• Withdraw Pending Appeals / Writs: If you filed an appeal before the Joint Commissioner (Appeals) in Gujarat, the Appellate Tribunal, or the Gujarat High Court, draft and submit a formal withdrawal application. Obtain an acknowledgment stamp or court withdrawal order copy.
• Gather Supporting Challans: Keep all Form GST DRC-03 ARN receipts, payment challans (CPIN), and notice reference details readily available in PDF format.

Step-by-Step Guide to Filing Form GST SPL-01 and SPL-02 Online

Follow this numbered operational workflow on the GST portal (gst.gov.in):

1. Log in to the GST Portal: Navigate to services.gst.gov.in and log in with your valid GSTIN credentials.
2. Access the Amnesty Application: Go to Services > User Services > Application for Waiver of Interest and Penalty under Section 128A.
3. Select the Application Type:
   • Choose Form GST SPL-01 if your case has an active Show Cause Notice or Statement (Form GST DRC-01/DRC-02) but no final order.
   • Choose Form GST SPL-02 if you are applying against an issued Adjudication Order (Form GST DRC-07) or Appellate Order.
4. Enter Demand Identification Details: Select the relevant Financial Year and enter the Show Cause Notice Reference Number or Adjudication Order Number. The portal auto-populates the original tax, interest, and penalty amounts from the departmental records.
5. Map Your Tax Payments: Enter the payment reference details. If you discharged tax via Form GST DRC-03, enter the ARN of the DRC-03. If payment was made directly through the electronic liability register, link the relevant challan details. Ensure the principal tax paid equals or exceeds the total demanded tax.
6. Upload Mandatory Attachments:
   • Upload proof of withdrawal of appeal or writ petition (copy of Form GST APL-01 withdrawal memo, order of Appellate Authority, or High Court disposal order).
   • Upload reconciliation summary showing how the tax liability was computed and satisfied.
7. Sign and Submit: Authenticate the application using your Digital Signature Certificate (DSC) for private limited companies and LLPs, or Electronic Verification Code (EVC) for proprietorships and partnerships. An Application Reference Number (ARN) will be generated instantly.

If your notice also involves return mismatches covered under DRC-01B or DRC-01C, review our GST DRC-01B and DRC-01C notice reply guide to coordinate your reconciliation papers.

Handling Departmental Notices: Form GST SPL-03 to SPL-05

Filing Form GST SPL-01 or SPL-02 initiates an official departmental verification timeline governed by Rule 164:

Taxpayer files SPL-01 / SPL-02
       │
       ▼
Proper Officer reviews payment & documents (within 3 months)
       │
       ├─────────────────────────────────┐
       ▼                                 ▼
Payment verified & complete       Discrepancy / Shortfall found
       │                                 │
       ▼                                 ▼
Order in Form GST SPL-05          Notice in Form GST SPL-03
(Interest & Penalty Waived)       (Explanation demanded within 30 days)
                                         │
                                         ▼
                                  Taxpayer replies in Form GST SPL-04
                                         │
                                  ┌──────┴──────┐
                                  ▼             ▼
                           Reply Accepted   Reply Rejected
                                  │             │
                                  ▼             ▼
                            Form SPL-05   Order in Form SPL-07
                                          (Waiver rejected)

1. Verification Period: The Proper Officer must verify the application within three months from the date of submission.
2. Acceptance (Form GST SPL-05): If the officer finds that the full principal tax has been paid and appeal withdrawal conditions are satisfied, they issue an order in Form GST SPL-05. This concludes all proceedings, and the outstanding interest and penalty entries are written off from your Electronic Liability Register.
3. Defect Notice (Form GST SPL-03): If the officer determines that tax has been underpaid, payments were mapped to the wrong head, or appeal withdrawal proof is inadequate, they issue a notice in Form GST SPL-03 detailing the deficiency.
4. Taxpayer Reply (Form GST SPL-04): You have thirty days from the receipt of Form GST SPL-03 to submit your explanation or pay any shortfall through Form GST SPL-04.
5. Appeals Against Rejection: If the Proper Officer rejects the waiver via Form GST SPL-07, the taxpayer may appeal under Section 107 within three months using Form GST SPL-08.

Common Mistakes to Avoid Under Section 128A

1. Applying for Section 74 Demand Notices: Section 128A strictly excludes demands involving fraud, suppression of facts, or wilful misstatement under Section 74. Submitting Form GST SPL-01 for a Section 74 notice will result in immediate rejection by the tax officer.
2. Forgetting to Withdraw Pending Appeals: The law mandates that taxpayers must formally withdraw any pending appeal before the First Appellate Authority (Joint Commissioner Appeals in Gujarat), Appellate Tribunal, or High Court. If you fail to attach the withdrawal application and proof of filing, your waiver application will face a notice in Form GST SPL-03.
3. Paying Under the Wrong Accounting Head in Challan: When paying the principal tax via Form GST DRC-03 or Electronic Cash Ledger, ensure the tax is apportioned accurately across CGST, SGST, and IGST according to the original notice. Depositing IGST when the notice demanded CGST/SGST leads to reconciliation errors.
4. Expecting Refund of Previously Paid Interest or Penalty: Section 128A(2) explicitly provides that any interest or penalty paid prior to filing the application will not be refunded. Do not adjust or claim credit for previously paid interest against the current principal tax demand.
5. Paying Partial Tax While Disputing the Rest Without Segregation: If an order contains multiple issues and you wish to claim waiver only on undisputed items, you must ensure the payment strictly matches the exact tax amount corresponding to those specific items as clarified under Circular No. 238/32/2024-GST.

Frequently Asked Questions

Can I get a waiver under Section 128A if my notice was issued under Section 74?

No. Section 128A strictly applies to notices and orders issued under Section 73 (non-fraud cases). However, if an appellate authority, tribunal, or court re-determines your Section 74 demand as a Section 73 demand under Section 75(2), you become eligible to claim the waiver.

What is the deadline to pay the tax under Section 128A?

The statutory pre-condition requires full payment of the demanded principal tax on or before 31 March 2025, or any subsequent extended date notified by the Central Government on the recommendations of the GST Council.

What happens if I have already paid the interest and penalty before Section 128A was notified?

Under Section 128A(2), no refund shall be granted for any interest or penalty that was already paid before the date of application. The benefit of waiver is available only for outstanding, unpaid interest and penalties.

Do I need to pay any penalty at all under Section 128A?

No. If your application under Form GST SPL-01 or Form GST SPL-02 is accepted, 100% of the penalty levied under Section 73(9) or other applicable penalty provisions for that demand is completely waived.

What if my appeal is currently pending before the Gujarat High Court?

You can still avail of the waiver, provided you file an application to withdraw the writ petition or appeal before the High Court. You must attach a copy of the withdrawal petition and acknowledgment along with Form GST SPL-01 or SPL-02.

Can I pay the principal tax using Input Tax Credit in my electronic credit ledger?

Yes, principal tax can be discharged using the balance in your electronic credit ledger, provided the credit is eligible and the utilization complies with the standard rules and restrictions under Section 49 and Section 49A of the CGST Act.

Is Form GST SPL-01 applicable if an order in Form GST DRC-07 has already been issued?

No. Form GST SPL-01 is for cases where only a notice or statement is issued and no order has been passed. If an adjudication order in Form GST DRC-07 has already been issued, you must file Form GST SPL-02.

What should I do if the tax officer issues a notice in Form GST SPL-03?

A notice in Form GST SPL-03 indicates that the officer found a discrepancy, such as a calculation shortfall or missing appeal withdrawal document. You must file your clarification or proof of balance tax payment in Form GST SPL-04 within 30 days of receiving the notice.

Does Section 128A cover demand notices for FY 2020-21?

No. The statutory scope of Section 128A is restricted strictly to tax periods relating to Financial Years 2017-18, 2018-19, and 2019-20. Demands for FY 2020-21 onwards are governed by standard adjudication provisions.

Can an unregistered person or a business with cancelled GSTIN apply for Section 128A?

Yes. Even if your GST registration was subsequently cancelled, you can log in to the GST common portal using your temporary ID or existing credentials to settle legacy Section 73 demands under Form GST SPL-01 or SPL-02.

Professional Assistance for GST Dispute Resolution

Resolving legacy GST demand notices requires meticulous cross-verification of electronic cash ledgers, DRC-03 adjustments, and drafting legal withdrawal petitions for pending appeals. If your business operates in Ahmedabad, Surat, Rajkot, Vadodara, Bhavnagar, or anywhere across Gujarat, our compliance desk can help review your Section 73 notices, calculate exact principal liability, and prepare your Form GST SPL-01 or SPL-02 filing.

Explore our dedicated GST return filing service for regular compliance or consult our team for comprehensive business tax filing and ongoing GST registration advisory. For immediate guidance, connect with our compliance team via WhatsApp or call our Bhavnagar office.

Disclaimer

This article is for general informational purposes and reflects the legal provisions understood at the time of publication under the Central Goods and Services Tax Act, 2017, the Gujarat Goods and Services Tax Act, 2017, and accompanying rules. Tax and compliance requirements can vary based on individual factual circumstances, judicial interpretations, and subsequent government notifications. Consider obtaining professional advice from an experienced tax advisor before taking financial or legal action on any pending GST notice or order.

Sources & References

• Central Board of Indirect Taxes and Customs (CBIC)
• GST Common Portal — Self-Service Helpdesk
• Section 128A, Central Goods and Services Tax Act, 2017
• Notification No. 20/2024-Central Tax (Commencement of Section 128A)
• Notification No. 21/2024-Central Tax (Insertion of Rule 164 in CGST Rules)
• Circular No. 238/32/2024-GST (Clarifications on Section 128A and Rule 164)