The Madras High Court has declined to interfere with a Rs. 50,000 general penalty imposed on a Coimbatore-based business for failure to file its final GST return, while granting the taxpayer three months to discharge the penalty.
The bench of Justice Senthilkumar Ramamoorthy directed that no recovery action be taken during the permitted period.
The petitioner approached the High Court under Article 226 of the Constitution, challenging proceedings dated November 28, 2025, issued under Section 74 of the Central Goods and Services Tax (CGST) and Tamil Nadu Goods and Services Tax (TNGST) Acts, as well as the consequential Form GST DRC-07.
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The petition sought quashing of the proceedings and a direction to the tax authorities to reconsider the matter in accordance with the applicable GST provisions, after following due process and providing an effective opportunity of hearing.
The dispute involved an aggregate general penalty of ₹50,000. Before the High Court, the taxpayer’s counsel submitted that the GST registration had been cancelled on January 25, 2019, and that there were no tax dues relating to the period during which the business had operated.
On that basis, it was argued that imposing a general penalty under Section 125 of the applicable GST enactments was not sustainable. Counsel also contended that the authorities could instead have imposed a late fee under Section 47.
The State tax authorities defended the penalty. The Additional Government Pleader appearing for the department submitted that there was no infirmity in the impugned order because the taxpayer admittedly had not filed the final return required under Section 45.
The department’s position was therefore that the failure to submit the final return constituted a contravention for which the general penalty provision could be invoked.
After examining the record, Justice Senthilkumar Ramamoorthy observed that the final return had not been filed.
The Court noted that Section 125 applies where there is a contravention of provisions of the GST law or the rules and no separate penalty has been prescribed for that contravention. In the present case, the Court found that the statute did not provide a separate penalty specifically for non-filing of the final return.
Consequently, the Court held that there was no legal infirmity in the imposition of the general penalty that would justify interference with the tax authorities’ order.
Although the Court declined to set aside the Rs. 50,000 penalty, it took note of the taxpayer’s assertion that there were no outstanding tax liabilities as of the date of the order.
As a measure of relief, the Court permitted the petitioner to pay the penalty within three months from the date of receipt of a copy of the order.
The Court directed that no recovery measures relating to the penalty should be initiated until the expiry of the three-month period.
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