Whether Late Fee or Penalty Can Be Demanded for Non-Filing of GSTR-8 When TCS Registration Cancellation is Pending with the Department

Whether Late Fee or Penalty Can Be Demanded for Non-Filing of GSTR-8 When TCS Registration Cancellation is Pending with the Department

Introduction

Under the GST law, e-commerce operators are required to collect tax at source (TCS) and file GSTR-8 on a monthly basis. However, practical difficulties have arisen in cases where the taxpayer has ceased e-commerce operations, applied for cancellation of TCS registration manually, and the application remains pending with the department for years due to administrative delays.

A common question faced by taxpayers in such situations is whether the department can subsequently demand late fees, interest, or penalty for non-filing of GSTR-8 merely because the GSTIN continued to remain active on the portal.

This article examines the issue in light of statutory provisions, portal instructions, and settled legal principles.

Legal Requirement to File GSTR-8

Section 52 of the CGST Act mandates filing of GSTR-8 only by a person who is liable to collect TCS. The obligation to file the return is therefore activity-based, not merely registration-based.

If:

1. No e-commerce activity is carried on, and

2. No tax is collected at source, the substantive requirement to file GSTR-8 does not arise.

Importance of Portal Clarification on NIL GSTR-8

The GST portal itself provides a crucial clarification in the Help section of GSTR-8, which states:

> It is not mandatory to file a “NIL” GSTR-8 statement where no tax is collected at source during the tax period and no changes are required in earlier filed statements.

This clarification is significant because:

1. It is an official system instruction, not an external advisory.

2. It acknowledges that non-filing of NIL GSTR-8 is permissible.

3. It negates the assumption that non-filing automatically attracts late fee.

Once the portal itself states that NIL filing is not mandatory, the department cannot take a contradictory stand while initiating recovery proceedings.

Effect of Pending Cancellation Application

There is no online facility for cancellation of TCS registration. Taxpayers are required to apply manually, which they did in good faith.

Where:

1. A manual cancellation application was duly submitted, and

2. The same has remained pending due to departmental inaction, the taxpayer cannot be penalised for administrative delay.

It is a settled principle of law that no person can be made to suffer for the fault of the department. The continuation of GSTIN on the portal in such cases is merely procedural and does not create fresh statutory obligations.

Late Fee under Section 47 – Whether Applicable?

Late fee under Section 47 of the CGST Act applies only when a return is required to be furnished but is filed late.

In cases where:

1. No TCS is collected, and

2. NIL GSTR-8 filing itself is not mandatory as per portal instructions, the condition precedent for levy of late fee fails.

Accordingly, late fee cannot be levied merely because the return was not filed, when filing was not compulsory in the first place.

Penalty and Interest – No Legal Basis

Penalty proceedings under GST require either:

1. Wilful non-compliance, or

2. An act resulting in tax evasion or revenue loss.

Similarly, interest can arise only where tax is payable but unpaid.

In the present scenario:

1. No TCS was collected

2. No tax was payable

3. No revenue loss occurred

Hence, neither interest nor penalty can be legally sustained.

Retrospective Cancellation – The Correct Course of Action

In such cases, the appropriate and lawful step for the department is to:

1. Decide the pending cancellation application, and

2. Grant cancellation retrospectively from the date of cessation of business or date of application, as permitted under GST law.

Once retrospective cancellation is granted, all consequential compliance demands automatically lose their basis.

Conclusion

The department cannot demand late fee, penalty, or interest for non-filing of GSTR-8 merely because a TCS GSTIN continued to remain active due to departmental inaction, especially when:

The taxpayer had applied for cancellation manually,

1. No e-commerce activity was carried on,

2. No TCS was collected, and

The GST portal itself clarifies that NIL GSTR-8 filing is not mandatory.

Any such demand would be legally unsustainable and contrary to the principles of natural justice.