" When no penalty is separately provided in TNGST Act, general penalty would apply" Madras High Court Partly Allows Petition
Sanchayita Lahkar
The Madras High Court has partly allowed a writ petition challenging the imposition of penalties under the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act), setting aside the general penalty of Rs. 50,000 levied towards CGST and SGST. The case was heard by A Single Bench of Justice Krishnan Ramasamy, who recorded that "penalty was imposed in the form of late fee in terms of Section 47 of the Act. Therefore, general penalty of Rs.50,000/- towards CGST and SGST is not correct and the same is set aside."
The court, however, upheld the late fee imposed under Section 47 of the Act, stating that "as far as late fee is concerned, the same is confirmed."
The petition was filed by Tvl. Jainsons Castors & Industrial Products, represented by its authorized representative, challenging the assessment order issued in Form GST DRC-07 with Reference No. ZD330724295618W, dated July 24, 2024. The order was passed under Section 73 of the TNGST Act, imposing penalties for the delayed filing of returns.
The petitioner contended that under Section 47 of the TNGST Act, only a late fee could be levied for the belated filing of returns. It was submitted that "as per Section 47 of the TNGST Act, 2017, only late fee can be levied," and that Section 125, which provides for a general penalty, could not be invoked when a specific penalty under Section 47 had already been applied.
The petitioner further argued that "no notice was issued as per Section 46 of the Act, however, penalty proceeding has been initiated against the petitioner." It was contended that Section 73 of the Act, under which the penalty proceedings were initiated, pertains only to the determination of tax liability and does not apply to cases of delayed return filing.
The respondent, represented by the Assistant Commissioner (ST), Ekkatuthangal Assessment Circle, submitted that "notice was issued under Section 47 r/w 73 of the Act since the petitioner failed to file annual returns in terms of Section 44 of the Act." It was contended that the late fee was imposed correctly, and the additional penalty was justified under Section 125 of the Act.
The respondent stated that "the late fee would come to Rs.1,12,000/- and the petitioner is not furnishing the full details of the turnover." It was submitted that the demand was made under Section 73 in accordance with the provisions of the Act.
The court examined Section 47(2) of the Act, which states:
"Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State."
It was observed that "any registered person, who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State."
The court recorded that "in the event of non-filing of the return, the respondent can call upon the petitioner to pay the late fee in terms of Section 47 of the Act, which is independent provision deals with any default or belated filing of return." It held that the show cause notice issued under Section 47 read with Section 73 was valid, stating: "Therefore, this Court does not find any fault in the show cause notice issued by respondent under Section 47 r/w 73 of the Act. The respondent is entitled to initiate proceedings as per applicable provision for non-filing of return."
However, the court found that the general penalty imposed under Section 125 was incorrect. It referred to the provision, which states:
"Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty-five thousand rupees."
The court observed that "a reading of the above would show that in the event no penalty is separately provided in this act, general penalty would apply." It further stated: "In the present case, penalty was imposed in the form of late fee in terms of Section 47 of the Act. Therefore, general penalty of Rs.50,000/- towards CGST and SGST is not correct and the same is set aside."
The court partly allowed the petition, setting aside the general penalty while confirming the late fee. The judgment stated: "With the above observation, this writ petition is partly allowed. There is no order as to costs. Consequently, connected miscellaneous petition is closed."
Advocates Representing the Parties
For the Petitioner: M. Varun Pandian
For the Respondent: C. Harsha Raj, Additional Government Pleader (Tax)
Case Title: Tvl. Jainsons Castors & Industrial Products v. The Assistant Commissioner (ST), Ekkatuthangal Assessment Circle
Case Number: W.P. No. 36614 of 2024 and W.M.P. No. 39493 of 2024
Bench: Justice Krishnan Ramasamy
[Read/Download order]
