Penalty Under Section 125 of TNGST Act Quashed; Late Fee Under Section 47 Upheld for Delayed Filing of Returns”
Case Summary: Tvl. Jainsons Castors & Industrial Products v. The Assistant Commissioner (ST)
Court: High Court of Judicature at Madras
Date: February 4, 2025
Judge: Justice Krishnan Ramasamy
Writ Petition: W.P. No. 36614 of 2024
Issue: Validity of a penalty imposed under Section 125 of the TNGST Act, 2017, in addition to a late fee levied under Section 47 of the same Act, for delayed filing of annual returns.
Facts:
- The petitioner filed a writ petition challenging an order passed under Section 73 of the TNGST Act, 2017, arguing it was illegal and against the principles of natural justice.
- The petitioner contended that for late filing of returns, only a late fee under Section 47 of the TNGST Act should be levied.
- The respondent issued a notice under Section 47 read with Section 73 of the Act, and imposed both a late fee and a penalty under Section 125.
- The petitioner did not challenge the late fee, but challenged the penalty under section 125.
Decision:
- The court held that the notice issued under Section 47 read with Section 73 of the TNGST Act was valid, as Section 47 provides for a late fee for delayed filing of returns.
- However, the court found that the penalty imposed under Section 125 of the TNGST Act was incorrect.
- Section 125 applies only when no specific penalty is provided for in the Act. Since Section 47 specifically provides for a late fee for delayed filing of returns, the general penalty under Section 125 cannot be imposed.
- The court set aside the penalty of Rs. 50,000 imposed under section 125.
- The court confirmed the late fee imposed under Section 47.
- The writ petition was partly allowed.
Key Takeaways:
- Specific vs. General Penalties: When a specific penalty is provided for a particular contravention in a tax Act, a general penalty for the same contravention cannot be imposed.
- Section 47 TNGST Act: Section 47 of the TNGST Act, 2017, is the specific provision for late fees related to the delayed filing of returns.
- Section 125 TNGST Act: Section 125 of the TNGST Act, 2017, is a general penalty provision that applies only when no specific penalty is provided elsewhere in the Act.
- Procedural Correctness: Tax authorities must adhere to the specific provisions of the law when imposing penalties.
- This case reinforces the principle that specific provisions of a law take precedence over general provisions.
W.P.No.36614 of 2024 and W.M.P.No.39493 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 04.02.2025
CORAM
THE HON’BLE MR.JUSTICE KRISHNAN RAMASAMY
W.P.No.36614 of 2024 and W.M.P.No.39493 of 2024
Tvl.Jainsons Castors & Industrial Products, Rep. by its Authorized Representatives, K.V.Srinivasamurthy, No.29-A B, Old Poonamallee Road, Achuthan Nagar, Chennai – 600 097. .. Petitioner
Vs.
The Assistant Commissioner (ST), Ekkatuthangal Assessment Circle, Station No.571, Integrated Buildings for Commercial Taxes Department, South Tower, Room No.305, 3rd Floor, Nandanam,Chennai – 600 035. .. Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India, pleased to issue Writ of Certiorari, calling for the records of the respondent in Form GST DRC-07 with Reference No.ZD330724295618W dated 24.07.2004 passed under Section 73 of the TNGST Act, 2017, and quash the same as illegal, devoid of merits and against principles of natural justice.
For Petitioner : Mr.M.Varun Pandian
For Respondent : Mr.C.Harsha Raj, Additional Government Pleader (Tax)
ORDER
This Writ Petition has been filed by the petitioner seeking to call for the records of the respondent in Form GST DRC-07 with Reference No.ZD330724295618W dated 24.07.2004 passed under Section 73 of the TNGST Act, 2017, and quash the same.
2.Learned counsel appearing for the petitioner would submit that, as per Section 47 of the TNGST Act, 2017 (hereinafter referred as ‘the Act’) only late fee can be levied. Further, the provision under Section 125 of the Act, will apply only in the case where no penalty is levied under Section 47 of the Act. Further, he would submit that no notice was issued as per Section 46 of the Act, however, penalty proceeding has been initiated against the petitioner. When Section 47 of the Act is available, for levy of the late fee, in the event of filing the return belatedly, in the present case,
notice has been issued under Section 47 r/w 73 of the Act and no notice can be issued in terms of Section 73 of the Act.
3.Learned counsel appearing for the petitioner would further submit that the petitioner has not challenged into the late fee imposed upon them. Their contention is only to the extent that no notice was issued before issuing the show cause notice. In the present case, already return has been filed, however, the petitioner has not file their turnover. The respondent without properly communicating about the assessment proceedings, has straight away issued show cause notice under Section 73 of the Act. Section 73 of the Act pertains only to determination of tax and the same does not spells about non-filing of returns. Hence, he prayed to quash the impugned
order.
4.Mr.C.Harsha Raj, learned Addl. Government Pleader appearing for the respondent would submit that in the present case, notice was issued under Section 47 r/w 73 of the Act since the petitioner failed to the file annual returns in terms of Section 44 of the Act. Therefore, the notice was issued under section 47 of the Act and also the demand was made under Section 73 of the Act. Therefore, there is no error in the initiation of proceedings and also in the decision making process. According to the respondent, the late fee would come to Rs.1,12,000/- and the petitioner is not furnishing the full details of the turnover. Hence, prayed for the dismissal of the writ petition.
5.Heard the submissions made by the learned counsel appearing for the petitioner as well as the learned Additional Government Pleader (Tax) appearing for the respondents.
6.In the present case, as per Section 44 of the Act, there was delay in filing the annual return by the petitioner. In the event of delay in filing the annual return, late fee would be levied under Section 47(2) of the Act. At this juncture, it is necessary to extract Section 47 of the Act:-
“47. (1) Any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38 or returns required under section 39 or section 45
by the due date shall pay a late fee of one hundred rupees for everyday during which such failure continues subject to a maximum amount of five thousand rupees.
(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.”
A reading of the above Section 47(2) of the Act, it is clear that 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.
7.In the event of non-filing of the return, the respondent can call upon the petitioner to pay the late fee in terms of Section 47 of the Act, which is independent provision deals with any default or belated filing of return.
Therefore, this Court does not find any fault in the show cause notice issued by respondent under Section 47 r/w 73 of the Act. The respondent is entitle to initiate proceedings as per applicable provision for non-filing of return.
However, in the present case, the respondent has imposed the late fee under Section 47 of the Act and also penalty under Section 125 of the Act. At this juncture, it is relevant to extract Section 125 of the Act, which reads as follows:-
“125. Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty five thousand rupees.”
A reading of the above would show that in the event no penalty is separately provided in this act, general penalty would apply. In the present case, penalty was imposed in the form of late fee in terms of Section 47 of the Act. Therefore, general penalty of Rs.50,000/- towards CGST and SGST is not correct and the same is set aside. As far as late fee is concerned, the same is confirmed.
8.With the above observation, this writ petition is partly allowed.
There is no order as to costs. Consequently, connected miscellaneous
petition is closed.