Belated GST annual returns filed before Notification 7/2023 cutoff: late fees capped at ?10,000; no Section 125 penalty

Where annual returns were filed belatedly but before the cut-off under N/N 7/2023-Central Tax (as amended by N/N 25/2023), the HC held that the notification's waiver/capping under s.128 of the respective GST enactments must extend to all such registrants, since late fee under s.47 is a penal fee imposed for breach of statutory obligation and the delegated power to waive includes prescribing limits. Consequently, the petitioners were held not liable to pay late fee beyond Rs.10,000/- under each enactment. The HC further held that general penalty under s.125 is invocable only where no other penalty is provided; since s.47 governs the default, s.125 could not be imposed. Petition allowed.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(i) Whether, on belated filing of "Annual Return" in Form GSTR-9, the authorities can impose both "Late Fee" under Section 47(2) and "General Penalty" under Section 125 of the respective GST Enactments for the same default.

(ii) Whether the waiver/partial waiver of "Late Fee" under Notification issued under Section 128 (fixing concessional "Late Fee" of Rs.10,000/- each under the respective GST Enactments for specified years) must be confined strictly to returns filed within the specified amnesty window, or can be extended to persons who filed the "Annual Returns" before the cut-off date in the Notification.

(iii) Whether a person who filed the "Annual Return" after the amnesty window (though within the outer time-limit contemplated under Section 44(2)) can still claim the Section 128 amnesty; and, irrespective of that, whether "General Penalty" under Section 125 can be sustained when "Late Fee" under Section 47(2) is levied.

2. ISSUE-WISE DETAILED ANALYSIS

(i) Simultaneous levy of Section 47(2) "Late Fee" and Section 125 "General Penalty"

Legal framework (as discussed by the Court): The Court examined Section 44 read with Rule 80 (obligation and due date for filing "Annual Return"), Section 47(2) (late fee for failure to furnish return under Section 44 by the due date), and Section 125 (general penalty). The Court also examined the nature of power under Section 128 (waiver of penalty/fee including late fee).

Interpretation and reasoning: The Court held that "Late Fee" under Section 47(2) is a "Penal Fee"-it is imposed only upon default, functions as a deterrent, lacks quid pro quo, increases with the period of default, and has civil consequences akin to a penalty. Since Section 125 is a "general" provision meant to apply only where no specific penal consequence is otherwise provided, once Section 47(2) is invoked for the very default (belated filing of annual return), there is no scope to superadd Section 125 for the same omission. The Court adopted the ratio that general penalty cannot be imposed where the Act already provides a specific penal exaction for that breach.

Conclusions: Imposition of "General Penalty" under Section 125 in addition to "Late Fee" under Section 47(2) for delayed filing of "Annual Return" is unsustainable; only the "Late Fee" mechanism can operate for that default.

(ii) Extension of Section 128 amnesty (concessional late fee cap) to persons who filed "Annual Returns" before the notified amnesty window

Legal framework (as discussed by the Court): The Court analysed Section 128 (waiver of penalty/fee including Section 47 late fee), contrasted it with Section 11 (exemption), and considered the design of the amnesty notification fixing that late fee in excess of Rs.10,000/- "shall stand waived" for specified years if returns were furnished within the notified period.

Interpretation and reasoning: The Court emphasised that Section 128 waiver notifications are driven by "mitigating circumstances" and operate differently from Section 11 exemptions. It nonetheless held that denying the benefit of partial waiver to persons who filed belated "Annual Returns" before the amnesty cut-off (while granting it to those who filed within the window) would be unfair and would amount to hostile discrimination, offending Article 14. The Court reasoned that if mitigating circumstances justified partial waiver to defaulters who filed within the window, there was no rational basis to exclude defaulters who had already filed prior to that date; singling them out would be arbitrary. Accordingly, the benefit of the concessional cap must be extended to those who filed before the window as well.

Conclusions: Petitioners who filed the relevant "Annual Returns" before 01.04.2023 were held entitled to the same partial waiver/concession: they are not liable to "Late Fee" beyond Rs.10,000/- under each of the respective GST Enactments for the covered years; and "General Penalty" under Section 125, where imposed, must be set aside.

(iii) Claim of amnesty by a person filing after the amnesty window; and sustainability of Section 125 in such case

Legal framework (as discussed by the Court): The Court noted the statutory due dates under Rule 80(1), the later insertion of Section 44(2) (outer time limit), and the limited Section 128 amnesty window under the notification.

Interpretation and reasoning: For the petitioner who filed the "Annual Return" on 19.01.2024 (after the amnesty window), the Court held there was no scope to extend the Section 128 waiver because the filing was long after the dates specified in Section 44(1) read with Rule 80(1) and outside the notified amnesty period. However, even in that case, since "Late Fee" under Section 47(2) was levied for the default, the Court held Section 125 "General Penalty" still could not be imposed in addition.

Conclusions: Amnesty under the notification was denied to the post-window filer; nevertheless, the "General Penalty" under Section 125 was set aside because "Late Fee" under Section 47(2) operated as the penal consequence for the default.

---