Statutory Waiver of Penalty Is Inadmissible If Tax and Interest Are Paid Beyond the Thirty-Day SCN Window

By | September 15, 2026
0 Comment
Statutory Waiver of Penalty Is Inadmissible If Tax and Interest Are Paid Beyond the Thirty-Day SCN Window
Issue
Whether a 10% penalty levied under Section 73 of the CGST/TNGST Act for delayed remittance of tax can be waived when the payment of tax and interest was delayed beyond thirty days from the issuance of the Show Cause Notice (SCN) due to COVID-19 disruptions.
Facts
  • The proceedings pertained to GST assessment for the period 2020–2021 involving tax demand of approximately ₹7.14 lakhs.
  • The petitioner remitted the tax via GSTR-3B with interest after a delay, attributing the delay to COVID-19 pandemic disruptions.
  • The adjudicating authority issued an order on 14.02.2025 levying a penalty calculated at 10% of the tax demand (~₹7.14 lakhs) under Section 73 along with statutory interest under Section 50.
  • The petitioner filed a writ petition challenging exclusively the imposition of the 10% penalty.
  • The petitioner failed to remit the tax and interest within thirty days from the date of receipt of the Show Cause Notice.
Decision
  • Decided in favour of the Revenue.
  • The court held that the statutory scheme permits waiver of the 10% penalty under Section 73 only if the tax and interest payable are fully remitted within thirty days of receiving the SCN.
  • Since the petitioner failed to make payment within the mandatory 30-day window, there existed no statutory basis to grant a waiver or interfere with the penalty.
  • The 10% penalty was within the statutory mandate, and the writ petition was disposed of without costs.
Key Takeaways
  • Strict Statutory Timeline for Penalty Waiver: Waiver of penalty under Section 73 is strictly conditional upon remitting tax and interest within 30 days of the SCN; courts will not extend this statutory window on equitable grounds like COVID-19 delays.
  • No Discretionary Power Outside Statutory Framework: Adjudicating and judicial authorities have no statutory discretion to reduce or set aside a validly imposed 10% penalty when explicit statutory preconditions for relief are not met.
  • Separability of Penalty Challenge: Taxpayers can challenge penalty orders independently, but the merits of such challenges remain anchored strictly to statutory compliance timelines.
HIGH COURT OF MADRAS
Global Infonetwork
v.
Superintendent of Central GST and Central Excise
Senthilkumar Ramamoorthy, J.
WP No. 33634 of 2026
WMP. No. 37028 of 2026
SEPTEMBER  2, 2026
J. Ram for the Petitioner. M. Santhanaraman, Senior Standing Counsel for the Respondent.
ORDER
1. An order dated 14.02.2025 is assailed insofar as imposition of penalty is concerned.
2. Learned counsel for the petitioner submits that the proceedings pertain to the assessment period 2020 – 2021, which was the COVID-19 pandemic period. As a result, he submits that there was a delay in remitting taxes under GSTR 3B.
3. Mr. M. Santhanaraman, learned Senior Standing Counsel, accepts notice for the respondent. He submits that 10% penalty was imposed under Section 73(1) and that interest was imposed in terms of Section 50(1). Therefore, he contends that there is no infirmity in the impugned order.
4. Except in cases where tax and interest are paid within thirty days from the date of receipt of show cause notice, the statute does not enable waiver of penalty at 10% of the tax. Penalty has been imposed at 10% of the tax demand of Rs.7,14,322/-. Therefore, I find no infirmity in the order warranting interference. By recording the same, this writ petition is disposed of without any order as to costs. Consequently, connected miscellaneous petition is closed.