Late Fees Imposed under Section 47 for delayed filing of GSTR 9C: Legal Analysis

Introduction : In addition to various other challenges faced by taxpayers and consultants, a prominent concern nowadays revolves around the imposition of late fees under Section 47 for the delayed filing of GSTR 9C. Taxpayers and consultants are receiving Show Cause Notices for the delayed submission of GSTR 9C. This article specifically delves into the scenario where both GSTR 9 and GSTR 9C are filed belatedly.

Legal Framework:

Before delving into the specifics, it is essential to understand the relevant sections of the CGST Act 2017 governing annual returns, late fees and the procedure and filing mechanism GSTR 9 / GSTR 9C:

Section 44. Annual return. –

(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:

After perusal of the above section it can be concluded that :

a) GSTR 9C is defined as a reconciliation statement, distinct from the return.

b) GSTR 9 may include GSTR 9C.

c) GSTR 9 /9C both are required to file electronically.

d) GSTR 9/9C cannot be filed in physical form.

Section 47 – levy of Late fees

(1) Any registered …………………

(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 or Union territory.

On perusal of Section 47 it can be concluded that :

a) Late fees are prescribed for the late filing of returns (GSTR 9).

b) No separate late fees are prescribed for reconciliation statements (GSTR 9C).

Let’s delve into the terminology and filing sequence of GSTR 9/9C:

a) As previously explained, according to the CGST Act 2017, GSTR 9 is referred to as the Annual Return, while GSTR 9C is termed as the Reconciliation Statement.

b) The filing process mandates that GSTR 9 must be submitted first, and only after its completion can GSTR 9C be filed.

c) It is impossible to file GSTR 9C prior to the submission of GSTR 9. 

I am of the opinion that the delayed filing of GSTR 9C does not incur any late fees. My belief is grounded in the following reasons

1. GSTR 9C is a reconciliation statement, not a return, as per Section 44.

2. No separate late fees are prescribed for GSTR 9C under Section 47.

3. GSTR 9C is an integral part of GSTR 9, and both must be filed electronically.

4. Taxpayer have paid the late fees of GSTR 9 and filed the GSTR 9C on the same date of filing as the date of GSTR 9 filing .

5. Penalising Noticee twice for the same act is not justifiable.

6. GSTN Portal Calculation Discrepancy:

It is crucial to highlight a notable inconsistency observed on the GSTN portal. While the portal automatically computes late fees during the filing of GSTR-9, no such calculation is evident for GSTR-9C. This disparity is indicative of the legislative intent, affirming that there is no distinct provision for late fees concerning the belated filing of GSTR-9C. This aligns with the clarity within the GST Act itself, corroborating that no separate late fee is intended for the delayed submission of GSTR-9C.

7. Inability to File GSTR 9C on the Due Date: The filing of GSTR 9C is rendered impossible on the due date, as GSTR 9 had not been filed by the specified deadline.

Furthermore, both the statutory provisions and rules prohibit the manual filing of GSTR 9C, emphasizing the mandatory electronic submission as outlined in Section 44.

8. Impossibility of Filing GSTR 9C before GSTR 9:

It is crucial to highlight the impossibility of filing GSTR 9C before GSTR 9. The doctrine of ‘Lex non Cogit Ad impossibilia’ is particularly relevant in this context. This Latin maxim implies that the law does not compel an individual to undertake an action that is futile, impossible, or beyond their capacity to perform.

Legal Precedents Supporting the Impossibility Argument:

To fortify our position, we draw your attention to legal precedents aligning with the principles of “Lex non Cogit Ad impossibilia”:

In the case of State of Rajasthan v. Shamsher Singh (1985 AIR 1082), the Hon’ble Apex Court asserted that if compliance with a mandatory provision is impossible, it serves as a valid excuse for non-compliance, especially when considering time constraints.

Likewise, the apex court in the matter of Life Insurance Corp Ltd. v. CIT (1996) 219 ITR 410 emphasized that the law does not mandate the performance of an impossible act – ‘Lex non cogit ad impossibilia.’

The Hon’ble Allahabad High Court, in Commissioner of Income Tax vs. Premkumar (2008) (2014) CTR 452 (All.), addressed the issue of penalizing an assessee for not declaring capital gains on land acquisition when the compensation amount remained undetermined. The court held that requiring the filing of a comprehensive return, including income under the ‘Capital gain’ category, would be impossible for the assessee in such circumstances.

Concluding Statement: If both GSTR 9 and GSTR 9C are filed on the same date, and late fees for GSTR 9 have already been settled, no additional late fees should be imposed, as discussed above. In this scenario, the principles of “Lex non cogit ad impossibilia” play a crucial role, justifying the delayed filing of GSTR 9C.