FCIK and CAIT Kashmir Welcomes GST Amnesty Scheme for Legacy Cases; Calls for Extended Coverage and Clarity

The Federation of Chambers of Industries Kashmir (FCIK) and Confederation of All India Traders (CAIT) Kashmir Chapter have welcomed the newly announced GST Amnesty scheme. FCIK welcomed the scheme while seeking enhanced clarity on specific aspects to remove ambiguities.

On the other hand, CAIT Kashmir welcomed the Amnesty Scheme under the GST law, introduced through the Finance Act (No. 2) 2024 under the leadership of its President Farhan Kitab.

Effective November 1, 2024, the GST Amnesty Scheme, introduced by the Ministry of Finance under Section 128A of the CGST Act, 2017, aimed to alleviate taxpayers’ financial burdens by waiving interest and penalties for those who fully settled their tax liabilities for the financial years 2017-18 to 2019-20 by March 31, 2025. It is primarily aimed at taxpayers facing demands, as long as there are no claims of fraud or fraudulent misrepresentation.

Although expressing satisfaction with the GST Amnesty scheme, FCIK highlighted the importance of expanding the initiative to cover all years of the GST regime from its start in 2017 to the present, as well as extending the term for remittance of arrears.

Members of the FCIK Advisory Committee analyzed the Amnesty scheme and concluded that, while it aimed to waive overdue interest and penalties from July 2017 to March 2020, the defined settlement time for qualifying taxpayers, which ends in March 2025, is insufficient and should be reviewed.

Members emphasized that the scheme has the potential to reduce litigation resulting from interpretational issues and errors; nonetheless, further clarity is required on essential topics. They questioned whether the scheme applies to all forms of tax payments, regardless of the method used, and whether it applies in circumstances when just interest is owed but no tax liability exists.

Committee members expressed worry about how the criterion for non-fraudulent eligibility would be assessed, considering that the department has issued frivolous notices under Section 74 even when there is no fraud. They warned that taxpayers could find themselves engaged in lengthy litigation to determine whether any fraudulent activity occurred.

However, members expressed confidence that the scheme will provide crucial relief to businesses engaged in transitional credit issues stemming from errors made during the transition period when credits were unlawfully claimed and used.

“While the scheme presently covers only the first three years of GST, it is important to extend it beyond 2020 for taxpayers in Jammu and Kashmir, considering the ongoing challenges they faced due to reorganization and the disruptions caused by the COVID-19 pandemic,” according to FCIK.

FCIK underlined that the issues associated with GST defaults have generally arisen from interpretational issues, form misunderstandings, human errors, and a variety of other variables encountered over the course of the GST regime. It is consequently critical to give relief to all enterprises, particularly MSMEs, which are now dealing with multiple difficulties that threaten their very survival.

FCIK has decided to formally raise the issue with the UT and the central government in order to provide much-needed assistance to Jammu and Kashmir taxpayers.

While, CAIT Kashmir on the matter said that a statement provided that the Central Government established the method for claiming these waiver benefits on October 8, 2024, by inserting Rule 164 into the Central Goods and Services Tax Rules, 2017. Circular No. 238/32/2024, dated October 15, 2024, gave additional clarification.

CAIT Kashmir Chapter requests that any traders who have received show cause notices (SCN) for non-payment or short payment of tax, or illegal availment or usage of Input Tax Credit (ITC) under Section 73(1), or a statement given in Form DRC-02, take advantage of this amnesty scheme.

Furthermore, the CAIT Kashmir Chapter requests the Commercial Tax Department to organize awareness camps to educate traders about these changes and compliance procedures.