Madras High Court bars GST general penalty where late fee under Section 47 applies

The Madras High Court in Kalanther Madeena Textiles Vs Deputy Commissioner (CT) has reaffirmed an important principle under the GST regime: where a Section 47 late fee has already been levied for delayed filing of annual returns, a separate general penalty under Section 125 cannot be additionally imposed for the same default.

The decision follows and applies the earlier ruling in Kandan Hardware Mart vs. The Assistant Commissioner (ST)(FAC) and the reasoning adopted in Tvl.Jainsons Casters and Industrial Products as well as the amnesty-related jurisprudence including M/s.R.T.Pharma Vs. Union of India and others. The Court has categorically held that “Late Fee” under Section 47(2) is penal in nature, and therefore, imposition of a further “General Penalty” under Section 125 for the same lapse is impermissible.

Background facts of the case

Non-filing of GSTR-9 / GSTR-9C for FY 2018–2019

The assessee, Kalanther Madeena Textiles, had failed to file the annual return in Form GSTR-9 / Form GSTR-9C for the Financial Year 2018–2019 within the time stipulated under Rule 80 of the respective GST Rules.

  1. A show cause notice in DRC-01 dated 04.01.2023 was issued to the assessee.
  2. The assessee:
    • Did not file the pending annual return for FY 2018–2019, and
    • Did not submit any reply to the show cause notice.
  3. The adjudicating authority consequently passed an order dated 28.02.2023, imposing:
    • Late fee under Section 47, and
    • General penalty under Section 125 of the respective GST enactments, 2017.

The assessee challenged this order before the Madras High Court by way of a writ petition, disputing the simultaneous imposition of late fee and general penalty.

Issues before the Court

The central question before the Madras High Court was:

  • Whether, for delay in filing GSTR-9 / GSTR-9C, both “Late Fee” under Section 47(2) and “General Penalty” under Section 125 of the respective GST enactments can be levied concurrently, or whether the levy of late fee precludes imposition of a general penalty for the same default.

Both sides agreed that this issue had already been examined in detail in Kandan Hardware Mart vs. The Assistant Commissioner (ST)(FAC), and therefore the present case was directly covered by that ruling.

Reference to earlier binding precedent

Reliance on Kandan Hardware Mart and Jainsons Casters line of cases

In the course of hearing, counsel for the assessee as well as the Government Advocate for the department submitted that the issue stood settled by the judgment in **Kandan Hardware Mart vs.