General penalty under Section 125

[MAHTAB KHAN]

An assessee delays filing GSTR-3B, Section 47 of the GST Act already prescribes a late fee, which is paid. AO still impose a general penalty under Section 125 for the same delay. When the Act already imposes a late fee under Section 47 for late filing of GSTR-3B, and the same has been paid, on what basis is an additional penalty under Section 125 justified? Is this not double penalty for one lapse? The AO’s imposition of Section 125 penalty is legally sustainable??

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

The late filing is not a punishable offence, warranting an additional penalty beyond the prescribed late fee. Imposing a further penalty under Section 125 would contradict the legislative intent as enumerated u/s 126. The penalty shall not be imposed for minor breaches of tax regulations or procedural requirements where the amount of tax involved is minimal and there is no fraudulent intent or gross negligence. The provision under Section 125 of the Act would apply only in the case where no penalty is levied under Section 47 of the Act.

The imposition of a penalty must be reasonable, proportionate, and consistent with statutory provisions and follow natural justice where there was no intent of misstatement or deliberate defiance of law. Section 47 is an independently operative section that would not call for additional or general penalty.

There are a few case laws against the imposition of additional penalty u/s 125 for late filing of returns.

M/s. Rathore Building Material vs. The Commissioner Of State Tax And 2 Others  - 2023 (12) TMI 555 - ALLAHABAD HIGH COURT by the Hon’ble Allahabad High Court.

Madras High Court Judgement in the case of Tvl. Jainsons Castors & Industrial Products vs The Assistant Commissioner (St) Ekkatuthangal Assessment Circle - 2025 (2) TMI 1000 - MADRAS HIGH COURT in Writ Petition No.36614 of 2024 and W.M.P. No. 39493 of 2024 / 4 February, 2025. In this case, the Hon’ble Court held that the penalty was imposed in the form of a late fee in terms of Section 47 of the Act. Therefore, the general penalty of Rs. 50,000/- towards CGST and SGST is not correct.

Accordingly, the querist can contest for levy of a penalty u/s 125.

[MAHTAB KHAN]

Sir,

Thank you so mutch for your valuable opinion and guidence. 

[KASTURI SETHI]

Actually as per legal dictionary,  "Late fee"" and "Penalty""  both are different concepts.  Meaning, sense and object of both phrases  are entirely different.This cannot be denied.

Such practice remained in force in Central Excise period also.

Fair justice/relief is possible via litigation only.

Practically, it is double punishment for SAME offence.

Excellent drafting by Sh. Kalleshamurthy Murthy Sir. His reply is full of LEGAL and LOGICAL force.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sri Kasturi Sethi Ji, 

Sir,

The Late Fee and Penalty are indeed different concepts. And also, as your good self opined, there should not be double punishment for the same offence. Thanks very much for the compliments. 

[Sadanand Bulbule]

While welcoming the replies, penalty under Section 125 is unwarranted in the obsence of deliberate contravention.

 This is high time for the authorities to be prudent enough to realise the essence of taxation ethics.

[KASTURI SETHI]

Dear Sir Ji,

Trade and Industry Association should make a representation to the Chairperson, GST Council  so that  assessees must not be a victim of the language of the GST laws. It is not the intent of Govt. to doubly penalize for same offence.

[Sadanand Bulbule]

Dear Sirji

I too agree. But the situation is like this. Only patient alone should  go to hospital for treatment. His neighbors are not worried. 

[KASTURI SETHI]

 Yes, Sir. Only wearer knows where the shoe pinches. But NEIGHBOURS also help in getting the proper treatment. 

[Shilpi Jain]

No general penalty where late fee is payable -  TVL. JAINSONS CASTORS & INDUSTRIAL PRODUCTS  2025 (2) TMI 1000 - MADRAS HIGH COURT

AI Summary

Penalty for late filing: additional general penalty may be impermissible where a statutory late fee already applies. Imposition of a general penalty under Section 125 for delayed GSTR-3B where a statutory late fee under Section 47 has been levied and paid is objectionable: absent fraud, gross negligence, or deliberate contravention, a further penalty amounts to overlapping punishment; penalties must be reasonable, proportionate and consistent with natural justice. Judicial authorities have held that where the late fee operates, a separate general penalty is not correct and may be contested.