Rule 164 introduced vide Notification No. 20/2024 CT dated 08.10.2024

Rule 164, introduced as an amendment to the Central Goods and Services Tax (CGST) Rules, 2017, defines the detailed procedure for closing proceedings related to tax demands under section 128A of the CGST Act. It focuses primarily on cases where taxpayers seek waivers of interest, penalties, or both for specific types of tax demands. Here’s a detailed breakdown:

1. Application Process for Waivers:
• Taxpayers eligible for waivers under section 128A can apply using specific forms:
FORM GST SPL-01 for cases involving notices or statements.
FORM GST SPL-02 for cases involving demand orders.
• These forms must be submitted electronically on the GST portal, along with required documentation, such as the notice or statement details and evidence of payments made through FORM GST DRC-03.
2. Eligibility and Conditions:
• Waivers apply to interest, penalties, or both related to demands under section 73, which generally pertains to tax demands for non-fraudulent cases.
• Applications for waiver can only be filed after full payment of the principal tax demand as outlined in the notice or statement.
• If the demand involves erroneous refunds or a combination of reasons, the entire amount must be settled before applying for the waiver.
• The applicant must provide proof of withdrawal if any appeal or writ petition was filed related to the tax demand. A pending withdrawal requires the applicant to submit a copy of the withdrawal application initially and later update the final order.
3. Timeline for Filing Applications:
• Applications must be submitted within three months from the date notified under section 128A.
• An extension to six months is allowed if the application pertains to orders requiring redetermination of tax liability.
• Taxpayers must provide evidence of payment and other relevant documentation within this timeframe.
4. Review and Decision Process by the Tax Authorities:
• The proper officer reviews the application and decides whether the waiver request is valid.
• If any discrepancies or ineligibility are found, the officer issues a notice in FORM GST SPL-03, giving the applicant a chance to respond within a month.
• Applicants can submit their responses through FORM GST SPL-04 and may request a personal hearing.
5. Outcome of the Review:
• If the proper officer is satisfied with the application, they issue an approval order in FORM GST SPL-05, concluding the proceedings and providing the waiver.
• If the application is rejected, the officer issues an order in FORM GST SPL-07 outlining the reasons for rejection, such as non-payment of full dues or failure to withdraw related appeals.
6. Deemed Approval:
• If the officer does not issue a decision within the specified time (generally three to four months, depending on the situation), the application is automatically deemed approved.
7. Appeals and Reconsideration:
• Taxpayers whose applications are rejected can appeal the decision. If the appellate authority overturns the officer’s rejection, the appellate authority issues an order in FORM GST SPL-06, granting the waiver.
• Taxpayers must then file an undertaking not to challenge the demand order further if the waiver is granted.
8. Effect of Non-compliance:
• If a taxpayer fails to comply with the conditions, such as not paying any remaining tax or interest within the specified time, any granted waiver becomes void.
• The waiver is also invalidated if the taxpayer does not withdraw related legal proceedings as required by the rule.

Rule 164 ensures a structured and transparent process for taxpayers to seek relief from penalties or interest through a clear application process, documentation requirements, and a timeline for both taxpayers and authorities to follow. It is designed to facilitate the resolution of tax demands while maintaining compliance and accountability.