A late fee for not filing GST returns is mandatory, even if the department does not issue a preliminary reminder notice in Form GSTR-3A.

A late fee for not filing GST returns is mandatory, even if the department does not issue a preliminary reminder notice in Form GSTR-3A.

Issue

Can the imposition of a mandatory late fee under Section 47 of the CGST Act, 2017, for the non-filing of an annual return be challenged on the procedural ground that the tax department failed to first issue a reminder notice in Form GSTR-3A?

Facts

• The assessee failed to file their annual GST returns for the period 2021-22.
• The GST department issued a show-cause notice directly proposing to levy the statutory late fee as prescribed under Section 47(2) of the Act.
• The assessee’s entire defense was a procedural one. They argued that before taking this step, the department was legally required to first issue a notice in Form GSTR-3A, which is a specific notice issued to remind a taxpayer who has defaulted on filing a return.
• The assessee claimed that since this prerequisite notice was not issued, the entire proceeding for the levy of the late fee was legally invalid. It was also noted by the court that the assessee had not filed the return even after three years had passed.

Decision

The High Court ruled decisively in favour of the revenue and dismissed the writ petition.

• It held that the liability to pay a late fee under Section 47(2) arises automatically by operation of law the moment there is a delay in filing a return. It is a mandatory statutory levy.
• The court reasoned that the issuance of a GSTR-3A notice is a procedural step intended to remind a taxpayer to file their return. The non-issuance of this reminder does not, and cannot, extinguish the mandatory liability to pay the late fee that has already been incurred due to the default.
• The court concluded that even if a GSTR-3A notice had been sent, the assessee would still have been liable to pay the late fee. Therefore, the assessee’s challenge on this procedural ground had no merit.

Key Takeways

• A Late Fee is an Automatic Consequence: The levy of a late fee under Section 47 is not a discretionary penalty that an officer decides to impose. It is a statutory and automatic consequence that is triggered by the simple fact of failing to file a return on time.
• Procedural Reminders Do Not Create the Liability: A procedural step like issuing a reminder notice (GSTR-3A) is separate from the substantive liability to pay the late fee. A failure in the procedural step does not invalidate the substantive liability, which arises from the taxpayer’s own default.
• The Onus is on the Taxpayer to Comply: The primary responsibility to know the due dates and to file tax returns on time rests squarely with the taxpayer. They cannot shift this responsibility by arguing that they were not specifically reminded by the department to do so.
• Prolonged Non-Compliance Weakens the Case: The court’s observation that the taxpayer had not filed the return even after three years likely demonstrated a clear disregard for compliance, which would have weakened any equitable argument the taxpayer might have tried to make.