NKR Traders Vs State Tax Officer (Madras High Court)
The Madras High Court, in NKR Traders v. State Tax Officer, held that a general penalty under Section 125 of the respective GST enactments cannot be imposed for non-filing of returns where a specific penalty mechanism in the form of late fee under Section 47 already exists. The petitioner contended that it had already been subjected to late fee liability under Section 47 of the TNGST Act, 2017 for failure to file returns for the Financial Year 2020-21, and therefore, the additional levy of general penalty under Section 125 was impermissible because Section 125 applies only in situations where no separate penalty has been prescribed.
The Court observed that the issue was covered by its earlier decision in Kandan Hardware Mart v. Assistant Commissioner (ST) (FAC). Referring to that judgment, the Court reiterated that where taxpayers are liable to pay late fee under Section 47 of the GST enactments, the imposition of general penalty under Section 125 cannot be sustained because Section 125 operates only in the absence of any other prescribed penalty.
The Court also referred to findings in Kandan Hardware Mart, wherein it had been held that taxpayers who had filed annual returns before 1 April 2023 could not be subjected to late fee exceeding ₹10,000 under each of the respective GST enactments, and that imposition of general penalty under Section 125 in such cases was unsustainable. Even in cases where late fee remained payable, there was no scope for simultaneously levying general penalty under Section 125.
