No General Penalty U/s 125 Once Late Fee Is Payable On Belated GSTR-9 Filing: Madras HC

The Madras High Court has held that once a registered person is liable to pay “late fee” under Section 47 of the GST enactments for belated filing of annual return in Form GSTR-9, the tax authorities cannot invoke the general penalty provision under Section 125 of the GST laws for the very same default. The bench of Justice C. Saravanan, by a detailed common order, disposed of a large batch of writ petitions challenging assessment orders, show cause notices, penalty proceedings, and recovery actions issued by State GST authorities for delayed filing of annual returns for multiple financial years starting from 2017-18 onwards. The writ petitions were filed by various registered persons including proprietorship concerns, partnership firms, and small business entities. The common grievance across all petitions was the levy of late fee under Section 47, and penalty under Section 125, for failure to furnish annual returns in Form GSTR-9 within the prescribed due date. In several cases, the petitioners had also challenged consequential proceedings such as summary orders in Form GST DRC-07, recovery notices, and attachment of bank accounts. The petitioners contended that the impugned orders were passed in violation of principles of natural justice, contrary to the statutory scheme, and without extending the benefit of Notification No. 07/2023-Central Tax dated 31.03.2023, issued under Section 128 of the CGST Act, which substantially reduced and capped the late fee payable for delayed filing of annual returns. The Court examined Section 47(2) of the GST enactments, which specifically provides for levy of late fee where a registered person fails to furnish the annual return under Section 44 by the due date. The provision prescribes a daily late fee subject to a statutory cap linked to turnover. The Court also took note of Rule 80 of the GST Rules, which prescribes the due date for furnishing annual return in Form GSTR-9, and the subsequent relaxation and waiver granted by the Central Government and the State Government through Notification No. 07/2023-Central Tax and the corresponding State notification. The bench of Justice Saravanan observed that the late fee under Section 47 is a self-contained levy, specifically designed to deal with the consequence of delayed filing of returns. The Court categorically held that Section 125, which is a general penalty provision, cannot be pressed into service where the statute itself provides a specific consequence for the default. The Court noted that once the legislature has prescribed a late fee for belated filing of returns under Section 47, the same default cannot again be subjected to a general penalty under Section 125. Invoking both provisions for the same lapse would amount to double penalisation, which is impermissible in law. The Court made it clear that Section 125 can operate only in cases where no specific penalty or late fee is provided elsewhere in the Act, and not where the default is squarely covered by Section 47. The High Court further observed that Notification No. 07/2023-Central Tax, issued pursuant to deliberations of the GST Council, was intended to give relief to registered persons who failed to file annual returns for earlier financial years. Accordingly, any computation of late fee must necessarily be carried out in accordance with the reduced rates and caps prescribed under the notification, provided the returns were filed within the stipulated amnesty window. Failure on the part of the assessing authorities to consider the benefit of the notification was held to be contrary to law. The Court quashed the impugned assessment orders, penalty orders, and recovery proceedings; and held that penalty under Section 125 cannot be imposed once late fee under Section 47 is payable for belated GSTR-9 filing. The court directed the concerned GST authorities to rework the late fee strictly in accordance with Notification No. 07/2023-Central Tax and the corresponding State notification and ordered that all consequential recovery actions shall stand set aside. Case Details Case Title: Ms.Kandan Hardware Mart Versus Assistant Commissioner (ST) (FAC) Case No.: W.P.Nos.27029 Date: 02.01.2026 Counsel For Petitioner: P.Rajkumar Counsel For Respondent: K.Vasanthamala Click Here To Read Order Read More: Promoter’s Fund-Infusion Undertaking Is Not a Corporate Guarantee Under Contract Law: Supreme Court

No General Penalty U/s 125 Once Late Fee Is Payable On Belated GSTR-9 Filing: Madras HC

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