PENALTY IMPOSED UNDER SECTION 27 FOR NON FILING OF ER-4,5,& 7 FOR F.Y. 2013-14

[ASHISH SHAH]

Respected Sir,

I am in receipt of Order for Show Cause issued for Non Filing of ER-4, ER-5 & ER-7 for F.Y. 2013-14 under Rule 27 of Central Excise Rules, 2002 by the Jurisdiction Officer.

We have filed the Respective ER-1 & ER-6 of all the Months for F.Y. 2013-14 but as we were not aware with respect to the applicability of ER-4,ER-5 & ER-7 to us we had not filed the same. Also the same was observed during Excise Audit conducted at our unit.

Kindly guide us in this regard.

[KASTURI SETHI]

Sh.ASHISH SHAH JI,

If you have not filed these annual returns so far, file immediately. In terms of Rule 12 (6) of CE Rules, 2002, you will have to deposit late fee @ ₹ 100/- per day subject to maximum of Rupees twenty thousand. It is per return. In this case, the A.C. has no discretionary powers to reduce or waive off late fee. However, under Rule 27, A.C. can waive or reduce penalty, if satisfied with the genuine reasons for delay. There is no escape route for waiver of late fee.

[Mahir S]

Sir,

(i) The point taken by the Audit party is perfect and truly correct. Also, penalty has been imposed under rule 27 as the issue pertains to the period prior to March 2015, after which rule 12 (6) has been made applicable.

(ii) Under rule 27, the penalty is negligible, so better to pay the penalty amount and submit the challan to the Division/Range office and to close the matter.

(iii) Else you may submit your defence reply asking to take leniant view therby pleading for reduction of the penalty amount.

I would personally prefer point (ii) above.

[KASTURI SETHI]

I endorse the views of Sh.Mahir S, Sir. Better option is to deposit late fee as well as penalty and thus be tension free.

[Mahir S]

[Suryanarayana Sathineni]

Dear Friend,

Though your stated reason is appears genuine, you cannot escape from the penalty. It is a general rule that Law cannot be ignored.

As already stated by our friends, if your non-filing of the return are genuine and with the reasons the officer is satisfied, then your penalty may be lesser and otherwise, you have no option but to pay the maximum penalty as prescribed.

Best Regards

Suryanarayana

[KASTURI SETHI]

Sh.Surya Narayana Ji,

Thanks a lot,Sir. You have cleared the air. About one month ago, there was lengthy discussion about late fee and penalty. During that discussion, I opined that both were separately imposable and I also cited CESTAT judgement in support of my argument but there remained disagreement. We cannot intermingle both terms.Penalty is always for contravention of rule or section. Late fee cannot replace penalty and vice versa.

AI Summary

Penalty under Rule 27 can be reduced for genuine reasons, but late fee remains mandatory and non-waivable. Penalty for non-filing of ER-4, ER-5 and ER-7 was imposed under Rule 27 for the relevant year; outstanding returns should be filed immediately. Late fee prescribed under Rule 12(6) (where applicable) is mandatory per return and not waivable by the assessing officer, whereas Rule 27 permits reduction or waiver of penalty if genuine reasons for delay are accepted. Practical options are to deposit the late fee and penalty to close the matter or submit a defence pleading leniency; late fee and penalty are legally distinct.