General Penalty Under Section 125 Cannot Be Imposed After Levying Late Fee for Belated Annual Return
Issue
Whether a general penalty under Section 125 of the CGST/TNGST Act can be imposed for delayed filing of annual returns in addition to the late fee levied under the Act.
Facts
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The petitioner failed to file annual returns within the statutory timeframe, resulting in a delay of 712 days.
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The tax authority passed an order imposing both a late fee and a general penalty under Section 125 for the period of delay.
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The petitioner filed a writ petition challenging the order, arguing that levying a general penalty alongside a late fee is impermissible under the law.
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The petitioner relied on the Madras High Court decision in Ms. Kandan Hardware Mart v. Asstt. Commissioner (ST) (FAC), which held that a general penalty under Section 125 cannot be levied once a late fee has been imposed.
Decision
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Late Fee Upheld: No ground was made out to interfere with the imposition of the late fee for the 712-day delay in filing annual returns [Para 3].
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General Penalty Set Aside: Following the precedent in Kandan Hardware (supra), a general penalty under Section 125 cannot be imposed after a late fee has already been levied [Para 3].
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Relief: The impugned order was set aside solely to the extent of the general penalty, while the late fee component was sustained [Para 3].
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Verdict: Decided partly in favour of the assessee.
Key Takeaways
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Bar on Dual Exactions: Tax authorities cannot double-penalize a taxpayer by invoking the general penalty under Section 125 when a specific late fee has already been charged for delayed return filing.
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Specificity of Late Fees: Delayed compliance (such as late filing of returns) is governed by specific late fee provisions; resorting to residuary penalty provisions like Section 125 is legally impermissible in such cases.
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Precedential Binding Force: The principle prohibiting the simultaneous levy of late fees and Section 125 general penalties stands reaffirmed for GST annual return defaults.
B.Syed Abdul Wakeel for the Petitioner. Ms.Amirta Poonkodi Dinakaran, Addl. Govt. Pleader (Tax) for the Respondent.
ORDER
1. An order imposing both late fee and penalty for non-filing of annual returns is assailed in this writ petition.
2. Learned counsel for the petitioner submits that this Court held in Ms. Kandan Hardware Mart v. Asstt. Commissioner (ST) (FAC) 114 GST 267 (Madras)/[(2026) 38 Centax 332 (Mad.)] that general penalty cannot be imposed after imposing a late fee.
3. On perusal of the impugned order, it is noticeable that late fee has been imposed for the period of delay of 712 days. No case is made out to interfere with the imposition of late fee. As regards penalty, as contended by learned counsel for the petitioner, this Court held in Kandan Hardware that general penalty under Section 125 of the applicable GST enactments cannot be imposed after imposing a late fee. Following the said position, the impugned order is set aside only insofar as it pertains to imposition of penalty.
4. The writ petition is disposed of on the above terms. Consequently, connected miscellaneous petitions are closed. There shall be no order as to costs.