Late Fee and General Penalty Under GST: Madras High Court’s Emerging Distinction Between Delay and Complete Non-Filing

The interaction between Section 47 and Section 125 of the CGST Act continues to generate litigation and divergent judicial opinions. A recent decision of the Madras High Court in Tvl. KPK Fuel Services v. State Tax Officer (02.06.2026) has revived this debate by upholding both:

• levy of late fee under Section 47(2) for failure to furnish annual return in Form GSTR‑9, and
• imposition of general penalty under Section 125 for the same failure.

This ruling is important because earlier benches of the same Court had taken a comparatively restrictive view, holding that where the statute already prescribes a specific consequence (such as late fee), the general penalty under Section 125 should not ordinarily be invoked for that very contravention.

Background: What Triggered the Dispute?

In Tvl. KPK Fuel Services v. State Tax Officer, proceedings were initiated for non-filing of the annual return for FY 2017‑18. The department passed an order imposing:

• late fee under Section 47(2), and
• penalty under Section 125.

The assessee challenged this dual levy on two principal grounds:

1. Scope of late fee under Section 47

   • According to the assessee, late fee can arise only where an annual return is actually filed after the due date.
   • If no return is filed at all, there is no “belated filing”, and therefore, the machinery for imposing late fee does not get triggered.

2. Bar on invoking Section 125 where a specific consequence exists

   • The assessee argued that once the statute provides for late fee as a consequence for failure to furnish the annual return, the same default cannot also attract the general penalty under Section 125.
   • Section 125 is positioned as a residuary provision, meant to step in only where no separate penalty is provided elsewhere in the Act.

The Madras High Court rejected both arguments and upheld the levy of late fee as well as general penalty.

Court’s Interpretation of Section 47(2): Late Fee for Continuing Non-Filing

Textual Reading of Section 47(2)

Section 47(2) imposes late fee on a registered person who “fails to furnish the return by the due date” and states that such fee is payable for every day during which such failure continues.

The Court read this provision expansively. Its key conclusions were:

• The expression “fails to furnish the return by the due date” is not confined to cases where the return is ultimately filed after a delay.
• The statutory language covers every instance of failure to furnish the annual return within the prescribed time limit.
• As long as the assessee continues to remain in default and does not file the annual return, the failure is ongoing, and the late fee continues to accrue.

Important: The Court treated complete non-filing as just an extended continuation of the default covered by Section 47(2), rather than a situation falling outside its ambit.

Consequence: Late Fee Permissible Even Without Filing

On this interpretation, the Court held that:

• Late fee under Section 47(2) is not dependent on the eventual filing of the annual return.
• Even if the annual return is never furnished, the assessee can still be saddled with late fee calculated for the period of continuing default.

This approach broadens the reach of Section 47(2) and effectively recognises late fee as a consequence that bites both:

1. when the annual return is filed late, and
2. when the annual return is not filed at all.

Court’s Approach to Section 125: General Penalty for Complete Non-Filing

No Specific Penalty for Non-Filing of Annual Return

While dealing with Section 125, the Court examined whether the GST law prescribes any distinct penalty specifically for complete failure to file the annual return. The Court observed:

• The statute prescribes a late fee for failure to furnish annual returns (Section 47), but
• It does not prescribe a separate penalty solely for non-filing of the annual return.

On this basis, the Court concluded that: