Introduction
In a noteworthy move aimed at easing the tax compliance burden and encouraging the settlement of past disputes, the Central Board of Indirect Taxes and Customs (CBIC) has notified the Central Goods and Services Tax (Second Amendment) Rules, 2025. These amendments bring significant changes to Rule 164 of the CGST Rules, with a strong focus on the implementation and operation of the GST Amnesty Scheme.
The changes offer greater flexibility to taxpayers dealing with pending appeals and provide much-needed clarity on the refund eligibility for amounts already paid under prior assessments. Let’s dive into what the amendment entails, how it affects taxpayers, and what strategic decisions businesses need to consider in light of these changes.
What Is the CGST (Second Amendment) Rules, 2025?
The Central Goods and Services Tax (Second Amendment) Rules, 2025, notified by CBIC, introduce revisions to Rule 164 of the CGST Rules, 2017. This rule pertains to the procedure for taxpayers seeking relief under the GST Amnesty Scheme, which offers waivers or reduced penalties for certain past periods.
These changes aim to improve dispute resolution efficiency and ensure fair implementation of the amnesty provisions.
Read More: GSTN Advisory: Common Errors in SPL-01/SPL-02 & How to Fix Them
Key Highlights of the Amendment to Rule 164
1. No Refunds on Amounts Paid Prior to the Amendment
A major clarification brought through this amendment is that no refunds will be granted for tax, interest, or penalties already paid before the commencement of the amended rules, even if such payments relate to periods now eligible for relief under Section 128A of the CGST Act.
This means any amounts voluntarily paid or paid under protest before the new rules came into effect are final and non-refundable.
2. Partial Withdrawal of Appeals Allowed
Another significant update is the option for partial withdrawal of appeals. If a taxpayer’s appeal covers multiple tax periods—some eligible for the amnesty and others not—they can now withdraw the appeal partially, specifically for the period covered under Section 128A(1).
This allows taxpayers to settle the portion eligible for amnesty while continuing disputes for other periods, bringing much-needed flexibility and administrative ease to both taxpayers and authorities.
3. Automatic (Deemed) Withdrawal of Appeals for Eligible Periods
Appeals related to the tax period from July 1, 2017, to March 31, 2020, will be automatically treated as withdrawn once the taxpayer opts for the amnesty scheme for that period. This step aims to reduce litigation backlogs and speed up the resolution of tax disputes.
What is Section 128A of the CGST Act?
Section 128A was introduced to facilitate the GST Amnesty Scheme and outlines provisions for taxpayers to obtain relief from penalties and interest for specific periods of non-compliance. The key objectives of this section include:
-
-
- Clearing backlog of disputed tax cases.
- Promoting voluntary compliance among businesses.
- Reducing litigation burden on taxpayers and tax authorities.
-
The amendment to Rule 164 defines how appeals and pre-paid dues will be handled under this scheme.
What Does This Mean for Taxpayers?
1. No Scope for Refund on Earlier Payments
Taxpayers expecting refunds on amounts paid before opting into the amnesty scheme must recalibrate financial assumptions. These payments are locked in and cannot be recovered, even if the liability for that period is reduced under the scheme.
2. Flexible Approach to Appeals
With the option to partially withdraw appeals, taxpayers can adopt a strategic approach—accepting relief for some periods while continuing disputes for others. This is particularly beneficial for businesses with multi-period disputes.
3. Automatic Closure of Appeals for Covered Periods
By opting into the GST Amnesty Scheme for specific periods, taxpayers will find their appeals automatically closed, reducing compliance workload and litigation costs.
Strategic Considerations for Businesses
Given these changes, here are some action points for taxpayers and businesses:
-
-
- Review Pending Appeals: Identify appeals covering both amnesty and non-amnesty periods. Consider partial withdrawal where beneficial.
- Consult Tax Advisors Promptly: Legal nuances regarding Section 128A and Rule 164 may impact your case differently. Seek guidance from a GST expert.
- Act Before Deadline: Amnesty schemes typically have a sunset clause. Delaying action may lead to missed benefits or lost opportunities for dispute resolution.
- Budget Accordingly: Since refunds on previously paid amounts are disallowed, ensure they are not factored into receivables or cash flow planning.
-
About the GST Amnesty Scheme
The GST Amnesty Scheme helps taxpayers clean their compliance slate by allowing them to pay reduced penalties and interest on:
-
-
- Late returns
- Unfiled returns
- Disputed tax amounts for earlier periods
-
This scheme is part of the government’s broader initiative to ease compliance burdens and reduce GST litigation, especially for taxpayers facing challenges during the initial GST rollout from 2017 to 2020.
With the latest amendments, the scheme becomes more structured, less ambiguous, and easier to navigate.
Conclusion: A Proactive Move to Resolve Legacy GST Disputes
The notification of the CGST (Second Amendment) Rules, 2025 marks another proactive move by CBIC to streamline GST dispute resolution and enhance taxpayer trust in the system. By:
-
-
- Allowing partial withdrawal of appeals
- Disallowing retrospective refunds
- Formalizing deemed withdrawals
-
…the government aims to clear old disputes efficiently.
At CaptainBiz, we encourage taxpayers to respond with agility and awareness, leveraging this opportunity to minimize liabilities, resolve past cases, and strengthen compliance for the future.
FAQs
1. What is the CGST (Second Amendment) Rules, 2025?
The CGST (Second Amendment) Rules, 2025, introduce key changes to Rule 164, focusing on the GST Amnesty Scheme. These amendments aim to ease tax compliance, provide flexibility in appeal withdrawals, and clarify refund eligibility.
2. What are the key changes to Rule 164 under the new amendment?
The main changes include:
-
-
- No refunds for tax, interest, or penalties paid before the amendment.
- Option for partial withdrawal of appeals.
- Automatic withdrawal of appeals for tax periods from July 1, 2017, to March 31, 2020, under the GST Amnesty Scheme.
-
3. Can I get a refund for tax payments made before the amendment?
No, any tax, interest, or penalty paid before the amendment remains final and non-refundable, even if the period is now covered under the amnesty scheme.
4. How does the partial withdrawal of appeals work?
If an appeal covers multiple tax periods, and only some are eligible for amnesty, taxpayers can withdraw the eligible portion while continuing to dispute the rest. This provides flexibility in managing pending cases.
5. What is Section 128A of the CGST Act, and how does it relate to the amnesty scheme?
Section 128A facilitates the GST Amnesty Scheme by allowing taxpayers to settle old disputes with reduced penalties and interest, promoting voluntary compliance and reducing litigation.
6. Will my appeal be automatically withdrawn if I opt for the amnesty scheme?
Yes, for tax periods between July 1, 2017, and March 31, 2020, appeals will be automatically considered withdrawn once the taxpayer avails of the amnesty scheme.
7. How should businesses respond to these changes?
Businesses should:
-
-
- Review pending appeals and consider partial withdrawal.
- Consult GST experts for strategic planning.
- Act before the amnesty scheme deadline.
- Adjust financial planning, as previous tax payments are non-refundable.
-
