Madras
High Court’s Ruling on Late Fee and Penalty Under GST: Analyzing the Case of
Tvl. Jainsons Castors & Industrial Products
By Yogesh Verma (CS/LLB) / 2 min read / GST Case Law
Introduction
The Madras High Court recently delivered a significant
ruling in the case of Tvl. Jainsons
Castors & Industrial Products v. The Assistant Commissioner (ST),
Ekkatuthangal Assessment Circle. The judgment, delivered on February 4, 2025, revolved around the imposition of a late fee under Section 47 of
the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act, 2017) and an
additional penalty under Section 125.
The case raises crucial questions about whether separate penalties can be imposed for
the late filing of GST returns and whether authorities followed due procedure
before initiating proceedings. The Court's partial acceptance of the petition, wherein the late fee was upheld but the penalty was set
aside, has wider implications for taxpayers facing similar situations.
This article provides a detailed examination of the case, including its facts, arguments, legal provisions, and the
reasoning behind the Court’s decision.
Case Details
- Case
Name: Tvl. Jainsons Castors &
Industrial Products v. The Assistant Commissioner (ST), Ekkatuthangal
Assessment Circle
- Case
Number: W.P.No.36614 of 2024 and
W.M.P.No.39493 of 2024
- Court: High Court of Judicature at Madras
- Date
of Order: February 4, 2025
- Judge: Hon’ble Mr. Justice Krishnan Ramasamy
Case Summary
The petitioner, Tvl.
Jainsons Castors & Industrial Products, filed a writ petition under Article 226 of the Indian
Constitution challenging an order issued under Section 73 of the TNGST Act, 2017. The disputed order imposed a late fee under Section 47 for delayed
filing of annual returns and an additional penalty under Section 125.
The petitioner did
not contest the late fee but opposed the imposition of a penalty,
arguing that the penalty was not legally sustainable since Section 47 already prescribes a late fee for
delayed filing of returns. The respondent, however, maintained that both the late fee and penalty were justified
under the law.
The Court ultimately partly allowed the petition,
ruling that the late fee under Section 47 was valid but the penalty
under Section 125 was unjustified and should be set aside.
Facts of the Case
1.
Non-Filing
of Annual Returns:
o The petitioner
failed to file their annual GST returns within the prescribed time under
Section 44 of the TNGST Act, 2017.
o The delay triggered a
late fee under Section 47 and an additional
penalty under Section 125.
2.
Issuance
of Show Cause Notice:
o The Assistant
Commissioner (ST), Ekkatuthangal Assessment Circle, issued a notice
under Section 47 read with Section 73.
o The notice imposed a
late fee of Rs. 1,12,000 and an additional
penalty of Rs. 50,000 (Rs. 25,000 each for CGST and SGST).
3.
Challenge
by the Petitioner:
o The petitioner did
not challenge the late fee under Section
47.
o However, they contested
the penalty under Section 125, arguing that it was unlawful because Section 47 itself provided a specific penalty
for late filing.
o They also claimed that no proper notice was issued under Section 46 before initiating the
proceedings.
4.
Respondent’s
Defense:
o The respondent
contended that the petitioner had failed to furnish annual returns under
Section 44 and was therefore
liable for both late fees and
additional penalties.
o The penalty was
imposed to ensure compliance and deter future delays.
Legal Provisions Involved
1. Section 44 of the TNGST Act, 2017
- Mandates
that every registered person must
file an annual return by the prescribed due date.
2. Section 47 of the TNGST Act, 2017
- Specifies a late fee for delayed filing of returns.
- Subsection (1):
Prescribes a fee of Rs. 100 per
day, subject to a maximum
limit of Rs. 5,000.
- Subsection (2):
States that for annual returns,
the late fee cannot exceed 0.25%
of turnover in the state.
3. Section 73 of the TNGST Act, 2017
- Provides
for determination of tax not paid
or short-paid due to reasons other than fraud.
4. Section 125 of the TNGST Act,
2017
- Imposes
a general penalty of up to Rs.
25,000 for violations not
covered under any specific penalty provision.
Arguments Presented
Petitioner’s Submissions
- Penalty
under Section 125 was unjustified:
- Section 125 applies only when no separate penalty provision exists.
- Since Section
47 already prescribes a late fee, an additional penalty under Section 125 is not permissible.
- No
Notice Issued Under Section 46:
- The petitioner argued that no notice under Section 46 was issued before initiating the
penalty proceedings.
- Assessment
Proceedings Were Not Properly Communicated:
- The petitioner contended that they were not properly informed about the assessment process
before being penalized.
Respondent’s Submissions
- Late
Fee and Penalty Were Justified:
- The failure to
file annual returns justified both the late fee under Section 47 and the
penalty under Section 125.
- The penalty
was necessary to ensure compliance and prevent future defaults.
- Proper
Notice Was Issued:
- The respondent claimed that a valid notice was issued under Section 47 read with Section 73.
Court’s Findings and Judgment
Findings
1.
Late Fee
Under Section 47 is Justified
o The Court held that Section
47(2) expressly provides for a late fee for non-filing of returns.
o The respondent had
the authority to levy a late fee, and the petitioner’s challenge to it
was rejected.
2.
Penalty
Under Section 125 is Unjustified
o Section 125 applies only when no
specific penalty is provided in the Act.
o Since Section 47
already imposes a penalty for delayed returns, an additional penalty under Section 125 was not
legally valid.
o The Court set aside
the Rs. 50,000 penalty imposed under Section 125.
3.
Procedural
Compliance
o The Court found no
procedural errors in issuing the notice under Section 47 read with Section 73.
o However, it emphasized that the penalty should not have been imposed separately under Section 125.
Final Judgment
- Writ Petition Partly Allowed
- Late Fee Under Section 47 Confirmed
- Penalty Under Section 125 Set Aside
- No Costs Awarded
Conclusion
The Madras High Court’s judgment provides clarity on the imposition of late fees and penalties
under the TNGST Act, 2017. The ruling reaffirms that general penalties cannot be imposed when a specific
provision already exists. This decision is particularly relevant for
taxpayers facing similar late fee and
penalty issues under GST law.
Key Takeaways from the Judgment:
- Late Fee under Section 47 is mandatory for
delayed GST returns.
- Authorities cannot impose an additional penalty
under Section 125 when Section 47 already provides a penalty.
- Procedural compliance is crucial before
imposing penalties.
This ruling will serve as an important precedent in GST litigation,
reinforcing the principles of natural
justice and proper application of penalty provisions under the GST
framework.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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