Case Law Details
Tvl. Jainsons Castors & Industrial Products Vs Assistant Commissioner (ST) (Madras High Court)
Summary: The Madras High Court addressed a writ petition challenging the penalty imposed by the Assistant Commissioner (ST) under the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017. The petitioner argued that only a late fee under Section 47 could be levied for the delayed filing of returns and that a general penalty under Section 125 was inapplicable. Additionally, they contended that no prior notice was issued as required under Section 46 before the penalty proceedings. The respondent maintained that the notice was appropriately issued under Section 47 read with Section 73 due to the petitioner’s failure to file annual returns under Section 44. The court clarified that Section 47 specifically governs late fees for delayed filings, making the imposition of an additional penalty under Section 125 unwarranted. Consequently, the court set aside the general penalty but upheld the late fee. The writ petition was partly allowed.
Legal Provisions Examined
Section 47 of the CGST Act, 2017 – Levy of Late Fee
Section 47 prescribes late fees for failing to furnish returns within the prescribed due date. Sub-section (1) states that a taxpayer who fails to file a return under Sections 39, 45, or 52 must pay a late fee of Rs. 100 per day per Act (CGST and SGST/UTGST), subject to a maximum of Rs. 5,000.
Example: If a taxpayer files their annual return 30 days late, the late fee under CGST and SGST would be Rs. 3,000 (100 x 30 days) under each head, totaling Rs. 6,000.
Section 125 of the CGST Act, 2017 – General Penalty
This section provides for a penalty of up to Rs. 50,000 (Rs. 25,000 under CGST and Rs. 25,000 under SGST) for contraventions where no specific penalty is prescribed elsewhere in the Act.
Example: If a taxpayer fails to display their GST registration certificate at their place of business, authorities may impose a penalty under Section 125, as no other provision directly addresses this contravention.
Madras High Court Ruling on Late Fees and General Penalty Under GST Law
The Madras High Court recently ruled in the case of Tvl. Jainsons Castors & Industrial Products v. The Assistant Commissioner (ST) [W.P. No.36614 of 2024 and W.M.P. No.39493 of 2024], addressing the interplay between late fees under Section 47 and general penalties under Section 125 of the Goods and Services Tax (GST) Act, 2017. The court clarified that when a late fee is imposed for delayed filing of returns, an additional general penalty under Section 125 cannot be levied.
Key Findings of the Court
1. Legality of Late Fees under Section 47
The court upheld the validity of the notice issued under Section 47 read with Section 73 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017. It ruled that the imposition of late fees for the delay in filing the annual return was legally justified under Section 47(2) of the Act.
2. Invalidation of General Penalty under Section 125
The court set aside the general penalty of Rs. 50,000 imposed towards CGST and SGST under Section 125, reasoning that no separate penalty provision was applicable in this case. Since a specific provision (Section 47) addressed the non-compliance (late filing of returns), a general penalty could not be imposed simultaneously.
3. Partial Allowance of Writ Petition
The writ petition was partly allowed, meaning that while the late fee was upheld, the general penalty was quashed. The court ruled that the respondent (tax department) had acted within their rights to impose late fees for non-filing of returns under Section 47, but erred in additionally imposing a general penalty under Section 125.
4. Clarification on Tax Authorities’ Power
The judgment reaffirmed that tax authorities can initiate proceedings under appropriate provisions for non-compliance, including the imposition of late fees under Section 47. However, applying a general penalty without a specific contravention warranting such an action is impermissible.
Analysis and Implications
The ruling underscores a crucial principle in tax law—when a specific penalty exists, a general penalty cannot be applied simultaneously. Taxpayers facing penalties should examine whether the authorities are levying additional penalties beyond what is permissible under the GST Act.
This case also highlights the importance of timely return filing to avoid penalties. Businesses should ensure compliance with GST provisions to prevent unnecessary financial burdens due to late fees or contested penalties.
Conclusion
The Madras High Court’s judgment in Tvl. Jainsons Castors & Industrial Products provides significant clarity on the application of penalties under GST law. It confirms that late fees under Section 47 are valid for delayed return filings but prevents unjustified general penalties under Section 125. Taxpayers should remain vigilant about the penalties imposed on them and challenge any unwarranted impositions by referring to this judicial precedent.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition has been filed by the petitioner seeking to call for the records of the respondent in Form GST DRC-07 with Reference No.ZD330724295618W dated 24.07.2004 passed under Section 73 of the TNGST Act, 2017, and quash the same.
2. Learned counsel appearing for the petitioner would submit that, as per Section 47 of the TNGST Act, 2017 (hereinafter referred as ‘the Act’) only late fee can be levied. Further, the provision under Section 125 of the Act, will apply only in the case where no penalty is levied under Section 47 of the Act. Further, he would submit that no notice was issued as per Section 46 of the Act, however, penalty proceeding has been initiated against the petitioner. When Section 47 of the Act is available, for levy of the late fee, in the event of filing the return belatedly, in the present case, notice has been issued under Section 47 r/w 73 of the Act and no notice can be issued in terms of Section 73 of the Act.
3. Learned counsel appearing for the petitioner would further submit that the petitioner has not challenged into the late fee imposed upon them. Their contention is only to the extent that no notice was issued before issuing the show cause notice. In the present case, already return has been filed, however, the petitioner has not file their turnover. The respondent without properly communicating about the assessment proceedings, has straight away issued show cause notice under Section 73 of the Act. Section 73 of the Act pertains only to determination of tax and the same does not spells about non-filing of returns. Hence, he prayed to quash the impugned order.
4. Mr.C.Harsha Raj, learned Addl. Government Pleader appearing for the respondent would submit that in the present case, notice was issued under Section 47 r/w 73 of the Act since the petitioner failed to the file annual returns in terms of Section 44 of the Act. Therefore, the notice was issued under section 47 of the Act and also the demand was made under Section 73 of the Act. Therefore, there is no error in the initiation of proceedings and also in the decision making process. According to the respondent, the late fee would come to Rs.1,12,000/- and the petitioner is not furnishing the full details of the turnover. Hence, prayed for the dismissal of the writ petition.
5. Heard the submissions made by the learned counsel appearing for the petitioner as well as the learned Additional Government Pleader (Tax) appearing for the respondents.
6. In the present case, as per Section 44 of the Act, there was delay in filing the annual return by the petitioner. In the event of delay in filing the annual return, late fee would be levied under Section 47(2) of the Act. At this juncture, it is necessary to extract Section 47 of the Act:-
“47. (1) Any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38 or returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred rupees for everyday during which such failure continues subject to a maximum amount of five thousand rupees.
(2) Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State.”
A reading of the above Section 47(2) of the Act, it is clear that any registered person, who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State.
7. In the event of non-filing of the return, the respondent can call upon the petitioner to pay the late fee in terms of Section 47 of the Act, which is independent provision deals with any default or belated filing of return.
Therefore, this Court does not find any fault in the show cause notice issued by respondent under Section 47 r/w 73 of the Act. The respondent is entitle to initiate proceedings as per applicable provision for non-filing of return. However, in the present case, the respondent has imposed the late fee under Section 47 of the Act and also penalty under Section 125 of the Act. At this juncture, it is relevant to extract Section 125 of the Act, which reads as follows:-
“125. Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty five thousand rupees.”
A reading of the above would show that in the event no penalty is separately provided in this act, general penalty would apply. In the present case, penalty was imposed in the form of late fee in terms of Section 47 of the Act. Therefore, general penalty of Rs.50,000/- towards CGST and SGST is not correct and the same is set aside. As far as late fee is concerned, the same is confirmed.
8. With the above observation, this writ petition is partly allowed. There is no order as to costs. Consequently, connected miscellaneous petition is closed.
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