No Simultaneous Levy of General Penalty under Section 125 if Late Fee under Section 47 is Applicable

Facts

The Default: The petitioner failed to file the GST Annual Return (Form GSTR-9/9C) for the Financial Year 2018-2019 within the prescribed timeline under Rule 80.
Departmental Action: The Revenue issued a Show Cause Notice (SCN) in Form DRC-01. Due to no response or filing from the petitioner, an order was passed.
The Dispute: The Adjudicating Authority imposed two distinct levies for the same default:
1. Late Fee under Section 47(2) for the delayed filing.
2. General Penalty under Section 125 for contravention of the Act/Rules.
Legal Challenge: The petitioner moved the High Court to challenge the double-imposition, specifically seeking to set aside the General Penalty.

Decision

Final Verdict: The High Court ruled partly in favour of the assessee, quashing the General Penalty while upholding the Late Fee.
Ratio Decidendi:
- Specific vs. General: Section 125 is a residual provision that applies only when “no penalty is separately provided for” in the Act. Since Section 47 specifically prescribes a levy (Late Fee) for the failure to file returns, Section 125 cannot be triggered for the same lapse.
- Penal Nature of Late Fee: The Court followed the precedent in Kandan Hardware Mart (2026), observing that while a “Late Fee” is not termed a “penalty,” it is penal in character.
- Lack of Mens Rea: Imposing an additional penalty without establishing mens rea (guilty intent) for a procedural delay is legally unjustifiable when a statutory late fee already addresses the default.

Key Takeaways

No Double Jeopardy: Tax authorities cannot “double-dip” by charging both a late fee and a general penalty for the same return-filing default. If an order contains both, the Section 125 portion is liable to be set aside.
Residual Provision: Professionals should audit pending SCNs to ensure that Section 125 is not being used as a “boilerplate” addition to specific penalties or fees. It can only be invoked for contraventions where the Act remains silent on specific consequences.
Amnesty Protection: This ruling reinforces that taxpayers who comply with late filing (especially under amnesty windows) should only be subjected to the specific late fees prescribed, shielding them from arbitrary general penalties.
Strategy for Pending Assessments: If a client faces a demand for GSTR-9 delays, ensure the reply explicitly cites this 2026 Madras High Court ruling to limit the liability strictly to the late fee under Section 47.

HIGH COURT OF MADRAS

Kalanther Madeena Textiles

Deputy Commissioner (CT)^*

C. Saravanan, J.

WP No. 9806 of 2025
WMP. No.10996 of 2025

FEBRUARY 4, 2026

T. Suresh for the Petitioner. Ms. P. Selvi, Government Advocate for the Respondent.

ORDER

1. In this writ petition, the petitioner has challenged the impugned order dated 28.02.2023, whereby the petitioner was imposed with penalty under Section 125 of the respective GST Enactments, 2017 and late fee under Section 47 of the respective GST Enactments, 2017 on account of the petitioner’s failure to file a Annual return in Form GSTR-9 / Form GSTR-9C within a prescribed period under Rule 80 of the respective GST rules for the Financial year 2018-2019.

2. The aforesaid impugned order was preceded by a show cause notice in DRC-01 dated 04.01.2023. However, the petitioner neither filed Annual return of the Financial year 2018-2019 nor filed any reply the aforesaid Show Cause Notice. Thus, the impugned order has been passed.

3. Heard the learned counsel for the petitioner and learned Government Advocate appearing for the respondents.

4. Both the learned counsel for the petitioner and the respondents submitted that the issue is no longer res integra and is covered by the order of this Hon’ble Court in Kandan Hardware Mart v. Assistant Commissioner (ST) (FAC) (Mad.), rendered on 02.01.2026 in W.P. No. 27029 of 2023 and batch cases. The operative portion of the said order reads as under:

“190. In Tvl.Jainsons Casters and Industrial Products referred to supra in W.P.No.36614 of 2024 rendered on 04.02.2025, this Court held that there is no scope for imposing “General Penalty” under Section 125 of the respective GST Enactment once “Late Fee” under Section 47 has been levied under these Enactments. “Late Fee” though not described as a “Penalty” is penal in nature; and the imposition of “Penalty” consequence without any element of mens rea is unjustifiable. In my view, there is no scope for levying both on a Registered Person.

191. The Petitioners in Table-3 [W.P.Nos.3540, 3567, 3570, 3902, 3966 of 2024] and the Petitioner in Table-4B [W.P.No.9867 of 2024] filed the “Annual Returns” under Section 44(1) of the respective GST Enactments within the time specified in the Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central tax dated 17.07.2023.

192. They have therefore been imposed with a lighter “Late Fee” of Rs.10,000/- under each of the respective GST Enactments in terms of the above Notification.

193. They are however questioning the imposition of “General Penalty” under section 125 of the respective GST Enactments. Since it has been already concluded that “Late Fee” under Section 47(2) of the respective GST Enactments was penal in nature, there cannot be imposition of “General Penalty” under Section 125 of the respective GST Enactments over and above the “Late Fee” levied at concessional rate under the abovementioned Notifications.

194. I am also inclined to adopt the above ratio in Tvl.Jainsons Casters and Industrial Products referred to supra. I therefore hold that there is no scope for imposing “General Penalty” under section 125 of the respective GST Enactments over and above the “Late Fee” levied on them at concessional rate under the abovementioned Notifications.

195. In the light of the above observations, W.P.Nos.3540, 3567, 3570, 3902, 3966 of 2024 from Table-3 deserve to be allowed.

196. The Petitioner in Table-4B [W.P.No.9867 of 2024] has been levied with “Late Fee” of Rs.1,17,038/- (Rs.58,519 x 2). The said Petitioner had filed the “Annual Return” on 15.06.2023. This filing of “Annual Return” was within the time limit prescribed under Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central tax dated 17.07.2023.

197. There are, however, no indications that the said Petitioner has been imposed with a “General Penalty” under Section 125 of the respective GST Enactments. Therefore, W.P.No.9867 of 2024 deserves to be allowed.

198. Therefore, the Petitioner in W.P.No.9867 of 2024 is entitled to the benefit of Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central Tax dated 17.07.2023.

199. As far as the case of Petitioners in Table-4A namely the Petitioners in W.P.Nos.27029, 27032, 27036, 32599, 34352, 34357, 35186 of 2023 and W.P.Nos.3572, 3916, 15690 of 2024 and W.P.Nos.9988, 28786, 42416, 46522 of 2025 are concerned, these Petitioners have challenged both imposition of “Late Fee” imposed under Section 47(2) of the respective GST Enactments and also “General Penalty” imposed under Section 125 of the respective GST Enactments.

200. They had filed the returns before the cut-off date prescribed in Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central Tax dated 17.07.2023. They cannot be denied the benefit of the said Notification, merely because in the 49^th GST Council Meeting held on 18.03.2023, GST Council failed to address the issue.

201. To deny the benefit of partial waiver from payment of “Late Fee” under the above Notification particularly to these Petitioners in Table-4A, who had filed the “Annual Returns” before the dates specified in Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central tax dated 17.07.2023. Challenge to the levy of “Late Fee” is to treat them unfairly. They cannot be singled out is justified as they have filed the “Annual Returns” before the cutoff dates stipulated in these Notifications.

202. Further, if the GST Council had found mitigating circumstances to give partial waiver from payment of “Late Fee” to those Registered Persons who had failed to file “Annual Returns” and could file their “Annual Returns” between 01.04.2023 and 31.08.2023 in terms of the above Notifications. I see no reason why the Petitioners in Table-4A who had filed the “Annual Returns” before the dates mentioned in the above Notifications should not be given the benefit of partial waiver in terms of the above Notification issued under Section 128 of the respective GST Enactments.

203. To single them out would amount to hostile discrimination and contrary to Article 14 of the Constitution of India. To suspend “Late Fee” would also lead to mistrust in the tax administration and would be an anathema to Article 14 of the Constitution of India.

204. To single out would amount to arbitrary exercise of law failing the test of arbitrariness recognized under Article 14 of the Constitution of India.

205. The Division Bench of the Himachal Pradesh High Court in the case of M/s.R.T.Pharma v. Union of India and others, while dealing with a similar issue arising out of delay in filing of the “Annual Returns” in GSTR-9 under Section 39 of the respective GST Enactments held that it would be unjust to deny a “Late Fee”, waiver to a taxpayer who filed their Goods and Services Tax (GST) Annual Returns (GSTR-9 and GSTR-9C) before a specific Amnesty Notification was issued in Notification No.7/2023-Central Tax dated 31.03.2023, and was amended by Notification No.25/2023-Central Tax dated 17.07.2023.

206. Therefore, the benefit of the above Notifications namely Notification No.7/2023- Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central tax dated 17.07.2023 has to be extended to all those Petitioners in Table -4A who had filed the returns before 01.04.2023.

207. Since these Petitioners are liable to pay “Late Fee”, the question of imposing “General Penalty” under Section 125 of the respective GST Enactments cannot be countenanced in view of the reasons that “General Penalty” under Section 125 of the respective GST Enactments can be imposed only in the absence of ‘any other penalty’ under the respective GST Enactments.

208. It is therefore held that the Petitioners in Table-4A are neither liable for “Late Fee” over and above Rs.10,000/- under each of the respective GST Enactments nor liable for “General Penalty” under Section 125 of the respective GST Enactments.”

5. In view of the above order, there cannot be any justification for the imposition of a General Penalty under Section 125 of the respective GST Enactments. Therefore, the writ petition is partly allowed to the extent of setting aside the imposition of the General Penalty under Section 125 of the Act. The petitioner shall however deposit the late fee levied under Section 47(2) within a period of 30 days from the date of receipt of a copy of this order.

6. At this stage, the learned counsel for the petitioner submits that the petitioner’s bank account has been attached to the extent of the demand confirmed vide impugned order.

7. The attachment of the petitioner’s bank account shall stand lifted, subject to the petitioner paying the late fee of Rs.1,57,800/- as confirmed vide the impugned order.

8. This writ petition is partly allowed to the above extent. No costs. Connected Writ Miscellaneous Petition is closed.