General Penalty Under Section 125 Cannot Be Levied for Non

General Penalty Under Section 125 Cannot Be Levied for Non Filing When Specific Late Fee Is Prescribed

Issue

Whether the tax authorities are legally justified in imposing a general penalty under Section 125 of the CGST/SGST Act in addition to a late fee under Section 47 for the non-filing of GST returns, and whether a bank account attachment can be sustained on the basis of such an additional penalty.

Facts

The petitioner failed to file their statutory GST returns under the state GST Act for the Financial Year 2020-21.
Due to this non-filing, a late fee was automatically attracted and imposed on the petitioner under Section 47.
In addition to the late fee, the first respondent (tax authority) proceeded to levy a general penalty under Section 125 for the same period of default and subsequently attached the petitioner’s bank account to recover the dues.
The petitioner challenged the assessment, arguing that a general penalty cannot be mechanically levied when a specific provision (late fee) already exists to penalize the exact same infraction. The petitioner expressed a willingness to clear the late fees but sought the immediate lifting of the bank account attachment.

Decision

The issue was decided partly in favour of the assessee. The general penalty was set aside, and the bank account attachment was ordered to be lifted subject to conditions.
Precedent Applied: The High Court observed that the issue stood squarely covered by the judicial precedent set in Ms. Kandan Hardware Mart v. Asstt. Commissioner (ST) (FAC) [2026].
No Double Penalty: It was held that a general penalty under Section 125 is a residual provision that can only be invoked where no specific penalty or fee is explicitly provided for an offense under the Act. Since Section 47 specifically governs the failure to furnish returns by prescribing a late fee, a general penalty under Section 125 cannot legally survive for the same default.
Relief and Conditional Lifting: Consequently, the tax intimation for 2020-2021 was quashed in part by deleting the general penalty. The petitioner’s total liability was strictly confined to the late fee. Furthermore, the court ordered the bank account attachment to be lifted immediately upon the deposit of the outstanding late fee by the petitioner.

Key Takeaways

Residual Nature of General Penalty: Section 125 of the GST Act acts purely as a safety net for unclassified infractions. If the statute handles a specific violation through a dedicated mechanism (like late fees under Section 47 for delays in filing), the revenue cannot double-dip by invoking general penalty provisions.

Specific Provision Overrides General Provision: The legal maxim generalia specialibus non derogant applies to GST. A specific provision dealing with a particular subject matter excludes the applicability of a general provision on the same matter.

Proportionality in Coercive Actions: Bank account attachments are extreme economic measures. When the underlying tax demand is heavily inflated by legally unsustainable penalties, courts will step in to release vital business assets on a conditional basis to ensure business continuity.

HIGH COURT OF MADRAS

NKR Traders

State Tax Officer^*

G. R. SWAMINATHAN, J.

WP No. 20291 of 2026
WMP Nos. 21748 and 21751 of 2026

MAY 21, 2026

E. Sathiyaraj for the Petitioner. T.N.C. Kaushik, AGP for the Respondent.

ORDER

1. Heard both sides.

2. The learned counsel for the petitioner states that for not filing the returns for the Financial Year 2020-2021, the petitioner has already been imposed with the Late Fee penalty under Section 47 of the TNGST Act, 2017 for the year 2020-21. Hence, the first respondent cannot impose the General Penalty under Section 125 of the Act, on the petitioner vide impugned order. Section 125 of the Act applies only where no specific penalty is provided. Hence, the impugned order is liable to be set aside. He further states that the first respondent had already recovered a sum of Rs.2,38,802/- and his bank account has been attached.

3. The issue, however, on merits is prima facie covered by the decision in Ms. Kandan Hardware Mart v. Asstt. Commissioner (ST) (FAC) 114 GST 267 (Mad) vide order dated 02.01.2026 in W.P. Nos. 27029 of 2023 batch. Therefore, this Writ Petition is disposed of by following the aforesaid decision of this Court wherein it was concluded as under:-

“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.

209. As far as the case of Petitioners in Table-4B namely the Petitioners in W.P.No.19967 of 2023 and W.P.Nos.23356, 30854, 9867 of 2024 and W.P.Nos.47726, 38007, 48941 of 2025 are concerned, they have been subjected to only “Late Fee” under Section 47(2) of the respective GST Enactments. They have not been subjected to “General Penalty” under Section 125 of the respective GST Enactments.

210. Since these Petitioners have also filed the “Annual Returns” before 01.04.2023, they cannot be subjected to “Late Fee” over and above Rs.10,000/- under each of the respective GST Enactments as ordered in the case of those Petitioners in Table-4A.

211. As far as the case of Petitioner in Table-4C namely the Petitioner in W.P.No.3915 of 2024 is concerned, the said Petitioner has filed the “Annual Return” only on 19.01.2024 for the Tax Period 2020-2021. It was within the time under Section 44(2) of the respective GST Enactments as the said date would have expired on 31.12.2024. However, there is no scope for granting any waiver from payment of “Late Fee” under section 47 of the respective GST Enactments, as it was long after the date specified in Section 44(1) of the respective GST Enactments read with Rule 80(1) of the respective GST Rules. The said Petitioner has been imposed with “General Penalty” of Rs.25,000/- each under Section 125 of the respective GST Enactments. There is no scope for imposing “General Penalty” under Section 125 of the respective GST Enactments for the reasons stated for the other Petitioners. Therefore, to that extent W.P.No.3915 of 2024 deserves to be allowed.

212. In the result,

W.P.Nos.3540, 3567, 3570, 3902 and 3966 of 2024 as detailed in Table-3 are allowed. Therefore, “General Penalty” imposed under Section 125 of the respective GST Enactments on these Petitioners are set aside.

(ii)

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 as detailed in Table-4A are allowed. Therefore, “General Penalty” imposed under Section 125 of the respective GST Enactments on these Petitioners are set aside. These Petitioners are liable to pay a “Late Fee” of Rs.10,000/- under the respective GST Enactments.

iii.

W.P.No.19967 of 2023 and W.P.Nos.23356, 30854, 9867 of 2024 and W.P.Nos.47726, 38007, 48941 of 2025 as detailed in Table-4B are allowed. These Petitioners are liable to pay a “Late Fee” of Rs.10,000/- under the respective GST Enactments.

iv.

W.P.No.3915 of 2024 in Table-4C is partly allowed. However, imposition of “General Penalty” under Section 125 of the respective GST Enactments is set aside in view of imposition of “Late Fee” against the Petitioner.

No costs. Consequently, all connected Writ Miscellaneous Petitions are closed.”

4. This Writ Petition is, therefore, partly allowed, subject to the following observations:-

(i)

Accordingly, the impugned intimation relating to the levy of Late Fee under the respective GST Enactments and the General Penalty under Section 125 of the respective GST Enactments for the Assessment Year 2020-2021 in excess of Rs. 50,000/- is quashed in part.

(ii)

The imposition of general penalty under Section 125 of the respective GST enactments for the Assessment Year 2020-2021 is not sustainable in view of the ratio of this Court in Ms. Kandan Hardware Mart referred to (supra). Accordingly, the imposition of General Penalty under Section 125 of the respective GST enactments shall stand set aside.

(iii)

The petitioner is, therefore, liable to pay Late Fee under Section 47 of the respective GST Enactments for the Assessment Year 2020-2021.

5. In view thereof, the attachment of the Petitioner’s bank account shall stand lifted subject to the Petitioner depositing the Late Fee demanded for the Assessment Year 2020-2021. Connected miscellaneous petitions are closed. No costs.