The Madras High Court has held that the GST Department cannot levy a duplicate late fee for the same tax period and has further ruled that a general penalty is unsustainable where late fee has already been imposed for the default.
The bench of Justice Senthilkumar Ramamoorthy also set aside a separate GST assessment order, subject to verification that recoveries exceeding 25% of the disputed tax demand had already been made, and remanded the matter for fresh adjudication on merits.
The petitioner challenged two assessment orders issued by the GST authorities.
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The first writ petition assailed an assessment order dated 23 October 2025, while the second challenged another assessment order dated 26 December 2025. The petitioner contended that the later order had already conclusively dealt with the issues relating to late fee, rendering the earlier order a duplication to the extent it again imposed late fee and penalty for the same tax period.
Counsel for the petitioner submitted that pursuant to the order dated 26 December 2025, the petitioner had paid ₹1,12,050 each towards CGST and SGST as late fee. Documentary proof of such payment was also placed before the Court.
It was further argued that the GST authorities had already recovered amounts well in excess of 25% of the disputed tax demand, and therefore the petitioner ought to be granted an opportunity to contest the assessment on merits.
While examining the order dated 23 October 2025, the High Court observed that it dealt only with the levy of late fee and penalty.
Since the petitioner had already discharged the late fee liability for the same period pursuant to the subsequent order dated 26 December 2025, the Court held that the late fee component in the earlier order was merely a duplication and therefore could not survive.
The Court also considered the levy of general penalty in the earlier order.
Relying upon its earlier decision in M/s. Kandan Hardware Mart v. Assistant Commissioner (ST) [(2026) 38 Centax 332 (Mad.)], the Court held that once late fee has been imposed for the default, a separate general penalty is not legally sustainable.
Accordingly, the Court quashed the entire assessment order dated 23 October 2025.
With respect to the assessment order dated 26 December 2025, the Court noted the petitioner’s submission that recoveries had already been made in excess of 25% of the disputed tax demand.
The Court directed that, subject to verification and confirmation of such recoveries, the assessment order should be set aside and the matter remanded to the assessing authority to enable the petitioner to contest the tax demand on merits.
The High Court disposed of both writ petitions and quashed the assessment order as it duplicated the late fee already imposed and improperly levied a general penalty. The assessment order dated 26 December 2025 was set aside, subject to verification that recoveries exceeding 25% of the disputed tax demand had already been effected. Upon such verification, the matter shall stand remanded to the assessing authority. The assessing authority has been directed to provide the petitioner with a reasonable opportunity of hearing and pass a fresh order within three months after verification of the recoveries.
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