Rule 164 in CGST Rules: Applicability, Purpose & Latest Amendments

Rule 164 of the CGST Rules, 2017, seeks waivers of interest, penalties, or both for tax demands under Section 73 from 1st July 2017 to 31st March 2020 (“relief period”). Section 73 empowers the GST officers to issue a show cause notice to taxpayers where tax is not paid due to reasons other than fraud.

Rule 164 is introduced to complement section 128A of the CGST Act, 2017, for providing procedures and conditions for closure of proceedings under section 128A. This article will discuss rule 164, its applicability and updates related to this rule.

What is Rule 164 in the CGST Rules?

Taxpayers who intend to apply for a waiver of interest, penalties, or both shall submit the form GST-SPL-01 or GST-SPL-02 after paying the tax demanded via DRC-03 or by crediting such amount in the electronic liability register.

Upon the satisfaction of the relevant authority, the taxpayer shall be eligible for a waiver of 100% interest and penalty computed under the CGST Act, 2017. Also, it shall be deemed that the proceedings for such matters are concluded and disposed of.

Applicability of Rule 164 in CGST Rules

Rule 164 applies to those cases which have pending tax demands and appeals pertaining to the period 1st July 2017 to 31st March 2020.

Purpose of Rule 164

Rule 164 helps to streamline and close long-pending cases by offering a systematic settlement process for the taxpayers and GST authorities. This rule has also helped the taxpayers to partially withdraw their appeal, easing the dispute resolution process.

Forms and procedures under Rule 164

Rule 164 involves various forms that are required to be submitted by the taxpayer and the tax officer. A process flow is stated under:

1. The taxpayer who intends to obtain a waiver under section 128A needs to file Form GST-SPL-01/02, as may be applicable, pertaining to the relief period. The form shall be accompanied by documents evidencing withdrawal of appeal or writ petition and payment of tax liability* for the specified period.
2. When the tax officer is satisfied that the taxpayer is eligible for a waiver, he shall issue an order via Form GST-SPL-05 about accepting the application and conclude the proceedings within three months from the date of the above application.
3. In case the tax officer rejects the above application filed by the taxpayer, it shall provide reasons to the taxpayer via Form GST-SPL-03 within three months from the date of application.
4. Upon receipt of Form GST-SPL-03, the taxpayer shall reply to the tax officer via Form GST-SPL-04 within one month from receipt of Form GST-SPL-03.
5. If the tax officer is satisfied that the taxpayer is eligible for a waiver, he shall issue an order via Form GST-SPL-05 about accepting the application and conclude the proceedings within three months from the receipt of Form GST-SPL-04.
6. When the tax officer is not satisfied with the reply from the taxpayer via GST-SPL-04, it shall reject the application by issuing an order via Form GST-SPL-07 within three months from the receipt of Form GST-SPL-04.
7. In case the tax officer does not receive any reply from the taxpayer, then it shall issue an order via Form GST-SPL-07 within four months from the date of Form GST-SPL-03.
8. If no orders are issued by the tax officer within the time limits specified above, then application via Form GST-SPL-01/02 shall be deemed accepted, and the taxpayer shall be eligible for the waiver.
9. Here onwards, the taxpayer can file an appeal against the order via Form GST-SPL-07 within three months from the date of the order to the appellate authority. In case the taxpayer does not file an appeal, then the original appeal (before filing Form GST-SPL-01/02) shall stand restored.
10. If the appellate authority is satisfied that the taxpayer is eligible for a waiver, it shall pass an order via Form GST-SPL-06 intimating acceptance of the application and conclude the proceedings.
11. In case the appellate authority finds that the tax officer has rightly rejected the waiver application, then the original appeal (before filing Form GST-SPL-01/02) shall stand restored only when the taxpayer files an undertaking in Form GST-SPL-08 within three months stating that he intends not to file any appeal against the above order.

In cases where, on conclusion of proceedings, appellate authorities require the taxpayer to pay additional tax liability in accordance with Section 128A, and the taxpayer fails to pay such tax liability within three months from the date of the order. Then, the waiver received through section 128A shall become void.

*Tax liability for the purpose of Rule 164 refers to the tax amount stated in the demand issued under section 73 less any ITC adjustment on account of sections 16(5) & (6).

Amendments or Updates to Rule 164

Notification no. 11/2025 dt. 27th March 2025 introduced key changes under Rule 164:

1. No refunds of interest or penalty shall be granted where the taxpayers have already paid such amounts.
2. Taxpayers can file their application for waiver under Section 128A after payment of tax pertaining to the relief period even if the notice or statement issued covered demand for multiple periods.
3. Taxpayers are given a gateway to partially withdraw their appeal pertaining to the relief period covered under section 128A without withdrawing the appeal for the subsequent periods, which are not covered under section 128A, by paying the tax amount pertaining to the relief period only.
4. Taxpayers can submit an application to the Appellate Authority, Tribunal or Court stating they do not wish to pursue an appeal for the relief period and would rather withdraw the appeal, which initially covered the relief period. This must be taken into consideration by the above authorities, and they must issue separate orders for periods other than the relief period.