The CBIC has issued instructions clarifying the procedure for appeals filed by the department in cases involving only interest and/or penalty under Section 128A of the CGST Act, 2017.

Section 128A provides a waiver of interest or penalty for demands under Section 73 of the CGST Act for the financial years 2017-18, 2018-19, and 2019-20, subject to conditions. This instruction addresses concerns about taxpayers being denied the benefit of Section 128A in cases where:

• The tax amount has already been paid, but the department has appealed due to errors in interest calculation or penalty thresholds.

The CBIC has clarified that taxpayers should not be denied the benefit of Section 128A due to the department’s appeal. The intention is to reduce litigation and ensure fair application of the law.

Proper officers are instructed to:

1. Withdraw appeals filed by the department if the tax amount is fully paid, and the issue pertains only to interest or penalty.
2. Accept orders under Section 73 that are under review if the taxpayer meets all conditions under Section 128A.

This instruction ensures that taxpayers eligible for the benefits of Section 128A are not penalised due to departmental technicalities, promoting a litigation-free environment.