regarding penalty u/s 125

[FARIDUDDIN AHMAD]

sir my client delayed in filing the GSTR-3B return for the month of Jan 2023 and received intimation u/s 46 on25/02/2023 of UPSGST Act 2017 to file the return within 15 days immediately thereafter GSTR 3B has been field on 01/03/2023. thereafter on same day-i,e on 01/03/2023 notice u/s 125 has been issued by the department. reply to the notice issued u/s 125 has been filed on 06/03/2023 stating the reason for delay was due to the shortage of fund because payments of bills issued to government department for work contract has not been received. however department did not consider my reply and passed the order u/s 125 by fixing demand of Rs-50,000/-(CGST-25000+SGST-25000). kindly provide if any citation is there to defend or any other ground to defend against the order in appeal.

[FARIDUDDIN AHMAD]

GSTR-3B is filed along with payment of tax interest and late fees

[KASTURI SETHI]

SH. FARIDUDDIN AHMAD JI,

Pl. Post major contents of Order-in-Original here. I want to examine how and on what grounds demand has been confirmed along with interest and penalty. Still full facts are known to me. You can also post order portion here. Thereafter, I shall post citation in your favour, if any.

[Amit Agrawal]

As Dept. has imposed general penalty u/s 125 against delayed filing of return, kindly use Section 126 to defend your case.

You have already paid all taxes with interest (for delayed payment) as well as late fees for the delay.

As you can see from Section 125 & 126, penalty u/s 125 is not mandatory and even if imposed, it need not be at fixed amount of Rs. 25,000/- under each act. Furthermore, before imposing penalty, an opportunity of being heard must be given to the tax-payer.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[FARIDUDDIN AHMAD]

respected Kasturi sethi sir only content of the order is "as notice U/s 125 for imposing penalty is been issued regarding not filing the GSTR 3B within time and reply submitted is without evidence and not satisfactory therefore in accordance with the provisions of GST Act penalty is imposed on you and you are required to deposit the penalty otherwise recovery proceedings will be initiated."

[Padmanathan KV]

You must rely on Section 126 as mentioned by Learned Friend Amit Ji:

Also consider taking the following stand:-

A.1. Nowhere in GST Law it is envisaged that cash portion of tax has to be paid first through electronic cash ledger for filing the GSTR-3B return.

A.2. In other words, this condition seems to be a "portal introduced condition" which is beyond the statute books.

A.3. This understanding can be further concreted by definition of "valid return" under section 2(117) to mean a return furnished under sub-section (1) of section 39 on which self-assessed tax has been paid in full;

A.4. Therefore, the Act itself envisages a situation where Return under section 39(1) (i.e. Now GSTR-3B) can be furnished without full payment of self-assessed tax and later, on full payment of the same it becomes a "valid return".

A.5. It is normal business practice that credit is given, which are usually more than one month (Act itself provides for 180 days time limit for payment of consideration in ITC context). This situation is even worse with Govt. projects, where there are delay in payment due to a variety of reasons.

A.6. In such situation, the GSTN portal should not be restricting the filing of return without payment of cash portion of tax. (i.e. Liability can be created in Electronic Liability Ledger and cash ledger may be setoff at later date with payment of 18% interest)

A.7. Had the GSTIN portal allowed you to file the return without payment of the cash portion, there would nave been no delay. Hence, the delay was beyond your control.

[KASTURI SETHI]

Late payment of tax does not mean mala fide intention---CESTAT Bangalore reported as Bangalore in the case of Bagalkot Cement & Industries Ltd. - 2020 (2) TMI 184-CESTAT

ST was paid with interest SCN was not required to be issued---CESTAT Kolkata reported as in the case of CCI Logictics Ltd. - 2021 (6) TMI 546-CESTAT Kolkota

Although both case laws pertain to pre-GST era, yet these can be relied upon.

Case laws on this issue pertaining to GST regime are also available. You will have to search. If I come across the same, I shall post here.

. There are two case laws on this issue but these pertain to pre-GST era

[FARIDUDDIN AHMAD]

sir commissioner appeal is also of the view that delay in filing GSTR 3B is contravention of provisions of GST Act.

[Padmanathan KV]

Fariduddin sir,

Is the appeal already filed and commissioner appeals has passed an order against you?

Very stranger that you have not got relief in appeal.

Anyhow, it would be wise to wait for tribunal and file appeal before the tribunal rather than going to the court.

If at all any recovery proceedings are initiated, pray for ONLY stay of proceedings before HC untill tribunal is constituted.

[KASTURI SETHI]

In continuation to my reply at serial no. 6 , I add as under :-

Section 125 of CGST Act corresponds to Rule 27 of erstwhile Central Excise Rules,2002. Since the same language has been carried forward in Section 125 of CGST Act, the decisions pertaining to Central Excise /Service Tax cases can be made applicable to the cases wherein Section 125 of CGST Act has been invoked. Hence can be relied upon.

[KASTURI SETHI]

A chronology of events worth noticing :

25.2.23 Notice under Section 46 of CGST Act received.

01.3.23 Return was filed.

01.3.23 Notice under Section 125 of CGST Act was issued and received. .

06.3.23 Reply to the notice was filed by the party.

From 7.3.23 to 16.7.23

Within four months the case was decided by the Adjudication Authority and appeal was filed and the appeal was also decided by the Appellate Authority upholding the Order-in-Original.

Why was the department in a hurry ?

What is the date of adjudication order ?

What is the date of personal hearing held ?

What is the date of personal hearing held by the Appellate Authority ?

What is the date of Order-in-Appeal ?

Pl. inform.

AI Summary

Penalty for delayed GST return filing: raise discretionary nature, hearing requirement, portal constraints and payment with interest as defences.
The taxpayer filed GSTR 3B after a notice, paid tax with interest and late fees, but received a penalty under section 125. Defences include that the penalty is discretionary not mandatory, a hearing is required before imposition, payment of tax with interest and fees mitigates the need for penalty, and portal requirements forcing upfront cash payment exceed statutory prescription. Arguments also rely on pre GST precedents that late payment without mala fide intent is mitigating and recommend raising these and seeking appellate relief and stays against recovery.