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2026 (1) TMI 383
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....jkumar, Mr.B.Raveendran And Others For the Respondent : Mrs.K.Vasanthamala Government Advocate, Mr.C.Harsharaj Special Government Pleader And Others COMMON ORDER By this Common Order, all these Writ Petitions are being disposed of. 2. In these Writ Petitions, the respective Petitioners have challenged the levy of "Late Fee" under Section 47 of the respective GST Enactments and / or "Penalty" under Section 125 of the respective GST Enactments or both. 3. The details of the impugned Assessment Orders and Show Cause Notices impugned in these Writ Petitions are as follows:- Table-1 Sl. No. W.P. No. Tax Period Show Cause Notice (DRC-01) Impugned Order 1. 27029 of 2023 2017-2018 11.02.2022 26.12.2022 (Penalty) 14.02.2023 12.05.2023 (Late Fee) 2. 34352 of 2023 2017-2018 10.12.2022 08.02.2023 3. 15690 of 2024 2017-2018 30.08.2023 30.12.2023 4. 23356 of 2024 2017-2018 20.01.2023 18.03.2024 5. 30854 of 2024 2017-2018 14.02.2023 03.11.2023 6. 46522 of 2025 2017-2018 29.09.2023 29.12.2023 7. 47726 of 2025 2017-2018 24.03.2023 30.12.2023 8. ....
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....which are pari-materia to each other is reproduced below:- 80. Annual return. - (1) Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year as specified under section 44 electronically in Form GSTR-9 on or before the end of such financial year the common portal either directly or through a Facilitation Centre notified by the Commissioner: Provided that a person paying tax under section 10 shall furnish the annual return in Form GSTR-9-A. (1-A) Notwithstanding anything contained in sub-rule (1), for the financial year 2020-2021 the said annual return shall be furnished on or before the twenty-eighth day of February, 2022.] (1-B) Notwithstanding anything contained in sub-rule (1), for the financial year 2022-2023, the said annual return shall be furnished on or before the tenth day of January, 2024 for the registered persons whose principal place of business is in the districts of Chennai, Tiruvallur, Chengalpat....
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....r Union territory. 2. Registered persons having an aggregate turnover of more than five crores rupees and up to twenty crore rupees in the relevant financial year. Fifty rupees per day, subject to a maximum of an amount calculated at 0.02 per cent of turnover in the State or Union territory 8. By Proviso to these Notification No.7/2023-Central Tax dated 31.03.2023, the total amount of the "Late Fee" under Section 47(2) of the said Enactment was fixed at Rupees Ten Thousand (Rs.10,000/-) each under the respective GST Enactments for those Registered Persons who had:- i. failed to furnish the return under Section 44 of the said Enactment by the due date for the Financial Years 2017-18, 2018-19, 2019-20, 2020-21, or 2021-22; and ii. filed such returns between 1st day of April, 2023 and 30th day of June, 2023. 9. Proviso to Notification No.7/2023-Central Tax dated 31.03.2023 is reproduced below for the sake of convenience:- Provided that for the registered persons who fail to furnish the return under section 44 of the said Act by the due date for any of the financial years 2017-18, 2018-19, 2019-20, 2020-21 or 2021-22, but furnish the said retur....
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....is the deliberation of the GST Council in its 49th Meeting held on 18.02.2023 in Agenda No.4(iv). Text of the relevant discussion and deliberation in the said Meeting in Agenda No.4(iv) are reproduced below:- "Agenda Item 4(iv): Rationalisation of late fee for FORM GSTR-9 and amnesty for non-filters of FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 5.4 The Principal Commissioner, GST Policy Wing stated that while the late fee for delayed filing of FORM GSTR-1, FORM GSTR-3B, FORM GSTR-4 and FORM GSTR-7 has already been rationalized from June 2021 onwards, based on the recommendations of the Council, however, the late fee for delayed filing of annual return in FORM GSTR-9 has not been rationalized as yet. Requests have been received from various stake holders as well as tax administrations for rationalization of late fee for delayed filing of annual returns. He further stated that requests have also been received from taxpayers as well as tax administrations to provide an amnesty scheme for waiver/ reduction of late fee for non-filers of FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10. 5.4.1 He stated that the same was deliberated by the Law Committee and the Law Comm....
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....TN. 5.4.4 The Hon'ble Member from Rajasthan thanked Law Committee for providing the Amnesty scheme for FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 and stated that Rajasthan Government has taken an initiative in its Budget 2023-24 to provide Amnesty scheme in respect of FORM GSTR - 1 and FORM GSTR -3B and has waived off the share of state for the late fee, which will be borne by the state. He stated that this will ensure greater return filing and would eliminate the hurdles. He suggested that the proposed Amnesty scheme for non-filers should be extended to FORM GSTR-1 and FORM GSTR-3B also, considering the condition of the MSMEs. 5.4.5 The Principal Commissioner. GST Policy Wing mentioned that this was deliberated by the Law Committee in detail and it was observed that the Amnesty schemes for non-filers of FORM GSTR-I and FORM GSTR-3B have been brought out a number of times. Law Committee took a view that there is no need for an amnesty scheme again for non-filers of FORM GSTR-I and FORM GSTR-3B, as the filing for both these Returns has now been systematically improved and stabilized. 5.4.6 The Hon'ble Chairperson clarified that irrespective of the emulate w....
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....gested that instead of going to 0.04% (0.02% + 0.02%) from 0.5% (0.25% +0.25%) in the one go, it would be more rational to reduce it to 0.1%. 5.4.8 The Secretary then stated that the setting up of upper limit is open for discussion and clarified that earlier the upper limit was 0.5% (0.25% + 0.25%) of the turnover and the recommended upper limit is 0.04% (0.02% + 0.02%) of the turnover. He further emphasized that the upper limit is on the turnover and not the profit and it was felt by the Law Committee that the 0.5% of the turnover is high, thus, it was recommended by the Law Committee to reduce the upper limit to 0.04% but it could be reconsidered by the Council. 5.4.9 Hon'ble Member from Maharashtra welcomed the reduced upper limit and stated that it could be accepted as it is only for the late fee and not interest. He supported the recommendation of the Law Committee and stated that when we are promoting ease of doing business, then giving such relief for late filing would not hamper anything and a very high late fee should not be insisted upon. 5.4.10 Hon'ble Minister from Haryana supported the Law Committee recommendations and stated that there are a....
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.... Late fee under Section 47 Penalty under Section 125 1. 3540 of 2024 2018-2019 30.06.2023 20,000/- (10,000/- each) 50,000/- (25,000/- each) 2. 3567 of 2024 2018-2019 27.06.2023 20,000/- (10,000/- each) 50,000/- (25,000/- each for CGST and SGST) 50,000/- for IGST 3. 3570 of 2024 2018-2019 28.06.2023 20,000/- (10,000/- each) 50,000/- (25,000/- each for CGST and SGST) 50,000/- for IGST 4. 3902 of 2024 2018-2019 27.06.2023 20,000/- (10,000/- each) 50,000/- (25,000/- each for CGST and SGST) 50,000/- for IGST 5. 3966 of 2024 2018-2019 05.06.2023 20,000/- (10,000/- each) 50,000/- (25,000/- each for CGST and SGST) 50,000/- for IGST 18. The Writ Petitioners in Table-3 have been given benefit of the above Notifications. However, they have been imposed with "General Penalty" under Section 125 of the Act. They, therefore, challenge the same, primarily in line with the reasoning adopted by this Court in Tvl.Jainsons Castors and Industrial Products, Represented by its Authorized Representatives, Chennai Vs. The Assistant Commissioner (ST), Nandanam, Chennai vide order dated 04.02.2025 inW....
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....nder Section 47 Penalty under Section 125 1. 27029 of 2023 * 2017-2018 03.09.2022 *1,88,200/- (94,100/- each) *50,000/- (25,000/- each) 2. 34352 of 2023 2017-2018 07.12.2022 1,15,258/- (57,629 each) 25,000/- (12,500/- each) 3. 15690 of 2024 # 2017-2018 27.10.2022 1,98,600/- (99,300/- each) 50,000/- (25,000/- each) # Show Cause Notice only issued. 4. 46522 of 2025 2017-2018 13.03.2023 2,27,400/- (1,13,700/- each) 50,000/- (25,000/- each) 5. 27032 of 2023 $ 2018-2019 26.12.2022 1,43,800/- (71,900/- each) $ (No order for late fee was issued and amount said to have been recovered from the Petitioner) 50,000/- (25,000/- each) 6. 3572 of 2024 2018-2019 01.02.2023 1,50,800/- (75,400/- each) 50,000/- (25,000/- each for CGST and SGST) 50,000/- for IGST 7. 3916 of 2024 2018-2019 25.01.2023 1,50,800/- (75,400/- each) 50,000/- (25,000/- each) 8. 27036 of 2023 2019-2020 19.11.2022 1,19,600/(59,800/- each) 50,000/- (25,000/- each) 9. 32599 of 2023 2019-2020 31.01.2023 1,33,400/(66,700/- each) 50,000/- (25,000/- each) 10. ....
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....er the above Notification, are as under:- Table - 4C No. Writ Petition Assessment Year Date of filing of Annual Return Late Fee under Section 47 Penalty under Section 125 1. 3915 of 2024 ** 2020-2021 19.01.2024 ** 89,800/- (44,900/- each) 50,000/- (25,000/- each) ** Return filed after cut-off date under Amnesty Notification 25. In all these cases, the Petitioners have filed the "Annual Returns" on the dates mentioned above and are claiming the benefit of Notification No.7/2023-Central Tax dated 31.03.2023, issued under Section 128 of the CGST Act, 2017 (Published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (i) vide G.S.R.250(E) dated 31.03.2023) as amended by Notification No. 25/2023-Central Tax dated 17.07.2023. 26. It is the case of these Petitioners in Table-4 that they are also entitled for concession under Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central Tax dated 17.07.2023. 27. The learned counsel for the Petitioners also relied on the following decisions of the Hon'ble High Court of Kerala and Himachal Pradesh, which have extended the b....
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....on and no prejudice is being caused as the Court can go into the question as to whether the demand for "Late Fee" was under any authority of law. 31. The Learned Counsel for the Respondent submitted that the taxpayers initially faced procedural challenges, particularly in filing returns within stipulated timeline. To address these issues, the Government periodically issued relaxations through various Notifications. 32. It is submitted that as a final relief measure, Notification No.07/2023-Central Tax dated 31.03.2023 and corresponding State Notification vide G.O.(Ms) No.39 dated 05.04.2023 was issued. It provided a three-month window from 01.04.2023 to 30.06.2023 for filing pending GSTR-9 returns under Section 44 of the GST Act and thus waived "Late Fee" in excess Rs.10,000/- each CGST and SGST respectively. 33. It is submitted that the main ingredients/conditions emanating from the plain reading of the Notification are as under:- 1.The notification is purely prospective in nature. 2.The notification is applicable for a limited period of 3 months. 3.The notification is only applicable to non-filers who had not filed their returns as on the date ....
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.... limited to the taxpayers complying within the stipulated period. 38. It is submitted that the Minutes clearly indicate that the Notification targeted only non-filers existing at the time of its issue, excluding assessee's who had already filed returns. If the intent was to reduce the "Late Fee" for those who filed GSTR-9 earlier, Section 47 of the Act would have been amended accordingly, and no separate Amnesty Scheme would have been required. 39. It is submitted that tax Notifications and their benefits fall within economic policy, warranting judicial self-restraint in reviewing such matters. It is submitted that a greater emphasis should be placed on the scheme's intent rather than rigid legal principles. The learned counsel for the Respondent placed heavy reliance on the Judgment of the Hon'ble Supreme Court emphasized this principle in R.K.Garg Vs. Union of India, (1981) 4 SCC 675. 40. It is submitted that assessee's outside the scope of the Notification, cannot claim equal benefits as a matter of right. The distinction between non-filers based on the time of filing, does not violate Article 14, as it is founded on a valid objective to promote tax compliance by incent....
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....ce of the Amnesty Scheme dated 31.03.2023, effective from 01.04.2023. However, none of the Petitioners filed their "Annual Returns" for the disputed years within the due date or during the Amnesty Scheme period, i.e., between 01.04.2023 and 31.08.2023. However, the Petitioners seek to extend the benefit of the Amnesty Scheme by altering the effective date of the Notification from 01.04.2023 to an earlier date. 48. This relief is sought before this Hon'ble Court without challenging the validity of the Notification itself through a writ of declaration or any other legal remedy. The pleadings of the Writ Petitioners lack any challenge to the validity or vires of the Notification. They also fail to justify as to why the benefit of the Notification should not be extend to the Petitioners who had already suffered an order before the Amnesty Scheme or outside its scope. No legal or factual basis has been provided for such an extension. 49. It is further submitted that the above cited Judgments establish that, without a challenge to the validity of a Statute or notification, the Court should not adopt an interpretation that renders it inoperative. As long as the Statute or Notificati....
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....ee-month window to file pending "Annual Returns" under Section 44 of the respective GST Enactments. It provided a waiver of "Late Fees" exceeding Rs.10,000/- each (CGST and SGST) to encourage compliance. The Notification aimed to induce non-filers to submit overdue GSTR-9 returns. This amnesty specifically targeted taxpayers who had not filed "Annual Returns" for Financial Years 2017-18 to 2021-2022. 55. It is submitted that the GST Council's intention behind the "Amnesty Scheme" was to provide a limited window for non-filers to comply with Section 44 of the GST Act, not to reduce "Late fees for those who had already filed returns earlier". 56. It is submitted that the taxpayers who filed before the scheme had duly paid "Late Fees" as per the law then in force. The legislators aimed only to benefit non-filers, not past complied taxpayers. Hence, the amnesty was never intended to revise or refund "Late Fees" already paid. 57. It is submitted that taxpayers who had already faced orders under Section 47 could not have foreseen the later amnesty benefit and were presumed to have complied under the law then in force. They acted and settled their liabilities based on the existin....
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....Enactments. 65. In some of these cases, this Court is concerned with imposition of "Late Fee" alone under Section 47(2) of the respective GST Enactments on account of such failure. 66. Section 47 of the respective GST Enactments have to be read in conjunction with Section 44 and Rule 80 of the respective GST Rules. Section 44, Section 47 of the respective GST Enactments and Rule 80 of the respective GST Rules are reproduced below:- Table-5 Section 44. Annual Return Rule 80. Annual Return Section 47. Levy of Late Fee (1) Every Registered Person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a nonresident taxable person shall furnish an Annual Return which may include a self- certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed: Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of Registered Perso....
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....he said section in Form GSTR-9-B. (3) Every Registered Person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, whose aggregate turnover during a financial year exceeds five crore rupees, shall also furnish a self-certified reconciliation statement as specified under section 44 in Form GSTR-9-C along with the Annual Return referred to in sub-rule (1), on or before the thirty-first day of December following the end of such financial year, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.] (3-A) Notwithstanding anything contained in sub-rule (3), for the financial year 20202021 the said self- certified reconciliation statement shall be furnished along with the said Annual Return on or before the twenty-eighth day of February, 2022. (3-B) Notwithstanding anything contained in sub-rule (3), for the financial year 20222023, the said self- certified reconciliation statement shall be furnished along with the said Annual Return on or before the tenth day of....
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....the expiry of a period of three years from the due date of furnishing the said "Annual Return". 72. Under Rule 80 of the respective GST Rules, every Registered Person other than those referred to therein, has to furnish the "Annual Return" for every Financial Year as specified in Section 44 of the respective GST Enactments electronically in Form GSTR-09 on or before 31st day of December following the end of such Financial Year through a Common Portal either directly or through the Facilitation Centre notified by the Commissioner. 73. Rule 80 of the respective GST Rules was amended vide Notification No.40/2021- Central Tax dated 29.12.2021 (with effect from 29.12.2021) by virtue of which, Rule 80(1A) and Rule 80(3A) were inserted. Rule 80 of the respective GST Rules was further amended vide Notification No.02/2024 - Central Tax dated 05.01.2024 (with effect from 31.12.2023) by virtue of which, Rule 80(1B) and Rule 80(3B) were inserted. 74. Due dates for furnishing "Annual Return" in Form GSTR-9 for the respective Financial Years under Rule 80(1), 80(1-A), 80(1-B) of the respective GST Rules are detailed below:- Table-6 Form GSTR - 9 Rule Rule 80(1) Rule....
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....ation placed before the 49th Meeting of thee GST Council that held on 18.03.2023. 80. It is in this background, Notification No.07/2023-CT dated 31.03.2023 was issued for Financial Years 2017-2018 to 2021-2022, the due date for filing "Annual Return" was prescribed between 01.04.2023 to 30.06.2023 together with a "Late Fee" of Rs.10,000/- under Section 47 of the respective GST Enactments. Simultaneously, same Notification was also issued by the State of Tamil Nadu vide G.O. (Ms) No.39 dated 05.04.2023. Notification No.07/2023-Central Tax dated 31.03.2023 was later amended by Notification No.25/2023- Central Tax dated 17.07.2023 whereby the last date for filing "Annual Return" under Section 44(1) of the respective GST Enactments was extended to 31.08.2023. 81. Thus, the defaulters could file such "Annual Returns" between 1st day of April 2023 and 31st of August, 2023 for the Tax period between 2017-2018 and 2021-2022 on payment of concessional Late Fee of Rs.10,000/- each under the respective GST Enactments for these years. 82. In the background of the above, the point for consideration that arise for discussion, in these cases are as follows:- i. Whether the Respo....
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....s the case may be under these two provisions are driven by altogether different considerations. Under Section 11(1) of the respective GST Enactments, "Exemption" is granted in the "Public Interest". 87. Such "Exemption" granted is either absolute by and / or subject to such conditions from payment of "Tax", either wholly or in part with effect from such date as may be specified in a "Notification". 88. Under Section 11(2) of the respective GST Enactments, the Government can also issue a "Special Order" under circumstances of an exceptional nature from payment of tax. The "Special Order" under Section 11(2) of the respective GST Enactments is also to be driven by "Public Interest". 89. Under Sub-Section (3) to Section 11 of the respective GST Enactments, the Government may for the purpose of clarifying the scope or applicability of any Notification issued either under Sub-Section (1) or under Sub-Section (2) may insert an "Explanation" to such Notification or "Special Order" as the case be by a Notification at any time within one year of issuance of such "Notification" or "Special Order" and every such "Explanation" shall have the effect as if it had always been the part of....
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....referred to in section 47 for such class of taxpayers and under such mitigating circumstances as may be specified therein on the recommendations of the Council. 92. A reading of Section 11 of CGST Act, 2017 makes it clear that it is similar to Section 5A of the Central Exercise Act, 1944, Section 25(2) of the Customs Act, 1962 and Section 93(1) of the Finance Act, 1994. 93. Thus, there is not only the power to grant a "general exemption" but also to grant an "Exemption" for the payment of "Tax" on any goods or services or both by special order, when tax is leviable. 94. Rule 12 of the Central Excise Rules, 2002 and Section 70 of the Finance Act, 1994 dealt with the provisions relating to filing of Service Tax Returns. Various Provisions of the respective GST Enactments relating to filing of "Annual Returns" read with the Provisions of respective GST Rules are inspired from these Provisions. LATE FEE IN THESE INDIRECT TAX ENACTMENTS 95. As far as the payment of "Late Fee" under Section 47 of the respective GST Enactments with which these cases are concerned, it has to be seen from the perspective of the amendment brought to the Central Exercise Rules, 1944 and the Ser....
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....e Central Excise Rules, 2002, Rule 12(6) was inserted vide Notification No.08/2015-Central Excise (N.T.) dated 01.03.2015. Rule 12(6) states that where any return submitted by the assessee after due date as specified for every return or statements, the assessee shall pay to the credit of the Central Government, an amount calculated at the rate of one hundred rupees per day subject to a maximum of twenty thousand rupees for the period of delay in submission of each such return or statement. 101. A similar provision was also incorporated in the Income Tax Act, 1961 in Chapter XVII vide Finance Act, 2012 with effect from 01.07.2012. Subsequently, over the period of time, other provisions have also been incorporated for such Late Fee. They are as under:- "G. - Levy of fee in certain cases 234E.Fee for default in furnishing statements. 234F.Fee for default in furnishing return of income." 102. In these cases, this Court is also concerned with the assessee's who have previously filed belated returns and have been subject to "Late Fee" under Section 47(2) of the respective GST Enactments. They have challenged the impugned "Late Fee", in the light of the Am....
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....bserved as under:- 59. The GST Council which is a constitutional body is entrusted with the duty to make recommendations on a wide range of areas concerning GST. The GST Council has plenary powers under Article 279-A(4)(h) where it could make recommendations on "any other matter" related to GST as the Council may decide. The GST Council has to arrive at its recommendations through harmonised deliberation between the federal units as provided in clause (6) of Article 279-A. Unlike the other provisions of the Constitution which provide that recommendations shall be made to the President or the Governor, Article 279-A states that the recommendations shall be made to the "Union and the States". The recommendation of the GST Council made under Article 279-A is non-qualified. That is, there is no explanation on the value of such a recommendation. Yet the notion that the recommendations of the GST Council transform into legislation in and of themselves under Article 246-A would be far-fetched. If the GST Council was intended to be a decision-making authority whose recommendations transform to legislation, such a qualification would have been included in Articles 246-A or 279-A. ....
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....ure amends the Constitution by exercising its constituent power and legislates by exercising its legislative power. The constituent power of the legislature is of a higher constitutional order as compared to its legislative power. Even if it is Parliament that has enacted laws making the recommendations of the GST Council binding on the Central Government for the purpose of notifying secondary legislations, it would not mean that all the recommendations of the Council made by virtue of its power under Article 279-A have a binding force on the legislature. POWER TO LEVY FEE AND THE CONSTITUTION 112. Power to levy "Fees" is traceable to Entry 96 of List I, Entry 66 of List II and Entry 47 of List III to the 7th Schedule to the Constitution of India. All of them read identically as "Fees in respect of any of the matters in this list, but not including fees taken in any Court". 113. The expression "Fees from service rendered" is followed in both Article 110(2) and 199(2) of the Constitution of India. 114. Court Fees charged by all Courts except the Hon'ble Supreme Court are traceable to Entry 3 to List-II to the 7th Schedule to the Constitution of India. Entry 3 to List-II ....
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.... notification following the council recommendation. Late fee in excess of Rs.10,000/- stands waived and this amnesty covers five financial years 2017-2018 to 2021- 2022. The period for submitting return under the amnesty was from 01.04.2023 to 31.08.2023 as noted above by the Notification No.25/2023 : MANU/CGST/0025/2023 dated 17.07.2023, issued in exercise of the powers conferred under Section 128 of the CGST / SGST Act. 25. When the Government itself has waived late fee under the aforesaid two notifications Nos.7/2023 : MANU/CGST/0007/2023 dated 31.03.2023 and 25/2023 : MANU/CGST/0025/2023 dated 17.07.2023 in excess of Rs.10,000/-, in case of non-filers there appears to be no justification in continuing with the notices for non payment of late fee for belated GSTR 9C, that too filed by the taxpayers before 01.04.2023, the date on which one time amnesty commences. In view of the aforesaid discussion, I am of the view that notices are unjust and unsustainable to the extent it sought to collect late fee for delay in filing GSTR 9C. However, it is made clear that the petitioners will not be entitled to claim refund of the late fee which has already paid by them over....
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.... preferably within three months from the receipt of the copy of this order. 10. The writ petition is allowed in the aforesaid terms. Pending application, if any, stands disposed of. No costs. 122. These decisions have not considered that there are subtle difference between "Tax", "Penalty" and a "Fee". Similarly, there are also subtle difference between an "Exemption" and a "Waiver". In this regard, I shall delve into these differences by referring to few decisions of the Courts. DIFFERENCE BETWEEN TAX AND FEE 123. In Commissioner, Hindu Religious Endowments Vs. Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, (1954) 1 SCC 412, the Hon'ble Supreme Court was concerned with the issue as to whether "Annual Contribution" under Section 76 of the Madras Hindu Religious and Charitable Endowments Act, 1951 was a 'Fee' or a 'Tax'? 124. The above decision was rendered by a Bench consisting of 7 Judges of the Hon'ble Supreme Court. The Court did not deal with "Fees" or for that matter "Penal Fee" or "Late Fee" levied under Section 47(2) of the respective GST Enactments. There, the Court was concerned with "Annual Contribution(s)" under Section 76 of the Madras Hin....
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....this Act and the other expenses incurred for such purposes, including the expenses of Area Committees and the cost of auditing the accounts of religious institutions." 128. These were challenged before this Court by the Respondent. The argument of the Respondent was that the "Annual Contribution" as was contemplated under the above provision was "Tax" and therefore the State Legislature was not competent to legislate on the said subject. 129. The challenge was initially made before this Court stating that the aforesaid provision was ultra vires the Constitution and it was in conflict with the fundamental right of the Respondent guaranteed under Article 19(1)(f), Article 25, Article 26, Article 27 of the Constitution of India. Simultaneously, a challenge was also made to Section 76 of the Madras Hindu Religious and Charitable Endowments Act, 1951. 130. This Court issued a "RULE NISI" on the Petition which was made absolute. It prohibited the Commissioner of the Madras Hindu Religious and Charitable Endowments Board from proceeding further with the framing of the Scheme. This Court also held that the "Annual Contribution" under Section 76 of the Madras Hindu Religious and Ch....
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....ding that the "Annual Contribution" levied under Section 76 was a "Tax" and not a "Fee" and consequently it was beyond the power of the State Legislature to enact the said provision. Relevant portion from the decision of the Hon'ble Supreme Court is extracted below:- 50. Section 76 of the Madras Act speaks definitely of the contribution being levied in respect to the services rendered by the Government; so far it has the appearance of fees. It is true that religious institutions do not want these services to be rendered to them and it may be that they do not consider the State interference to be a benefit at all. We agree, however, with the learned Attorney General that in the present day concept of a State, it cannot be said that services could be rendered by the State only at the request of those who require these services. If in the larger interest of the public, a State considers it desirable that some special service should be done for certain people, the people must accept these services, whether willing or not [Findlay Shirras, Science of Public Finance, Vol. I, 202]. It may be noticed, however, that the contribution that has been levied under Section 76 of the Act ....
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....d; b. Imposition of Tax is made for public purpose without reference to any special benefit to be conferred on the payer of the tax; c. There is no element of quid pro quo between the taxpayer and the public authority; d. Collection of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State; e. Tax is a part of the common burden, the quantum of imposition upon the taxpayer depends generally upon his capacity to pay. 138. The Hon'ble Supreme Court made reference to the following cases in para 44:- i. Matthews Vs. Chicory Mktg. Board (Victoria), (1938) 60 CLR 263 at p. 276 (Aust) ii. Lower Mainland Dairy Products Sales Adjustment Committee Vs. Crystal Dairy Ltd., 1933 AC 168 (PC) iii. Findlay Shirras, Science of Public Finance, Vol. I, 203. 139. In para 45, the Hon'ble Supreme Court also made the following observations:- 45. Coming now to fees, a "fee" is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government ....
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.... who own houses, the land tax by those who possess lands, municipal taxes or rates will fall on those who have properties within a municipality. Persons, who do not have houses, lands or properties within municipalities, would not have to pay these taxes, but nevertheless these impositions come within the category of taxes and nobody can say that it is a choice of these people to own lands or houses or specified kinds of properties so that there is no compulsion on them to pay taxes at all. Compulsion lies in the fact that payment is enforceable by law against a man in spite of his unwillingness or want of consent; and this element is present in taxes as well as in fees. Of course, in some cases whether a man would come within the category of a service receiver may be a matter of his choice, but that by itself would not constitute a major test which can be taken as the criterion of this species of imposition. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege. Fees confer a special capacity, although the special advantage, as for example in the case of regi....
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....n the tax and fees and as said by Seligman, the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes [Seligman's Essays on Taxation, 406]. 49. Our Constitution has, for legislative purposes, made a distinction between a tax and a fee and while there are various entries in the legislative lists with regard to various forms of taxes there is an entry at the end of each one of the three lists as regards fees which could be levied in respect of any of the matters that is included in it. The implication seems to be that fees have special reference to governmental action undertaken in respect to any of these matters. 142. The statement of law made in Commissioner, Hindu Religious Endowments Vs. Lakshmindra Thirtha Swamiar of Sri Shirur Mutt referred to supra, regarding the attributes of a "Tax", "Fee" has undergone a slight change over a period of time. 143. In Automobile Transport Limited Vs. State of Rajasthan, 1962 SCC OnLine SC 21, the Hon'ble Supreme Court equated "Regulatory Charges" with "Compensatory Taxes". The Hon'ble Supreme Court took a view that the "Compensatory Taxes" constitute an....
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....gned is the result of the exercise of regulatory power or whether it is the product of the exercise of the taxing power. If the impugned law seeks to control the conditions under which an activity like trade is to take place then such law is regulatory. Payment for regulation is different from payment for revenue. If the impugned taxing or nontaxing law chooses an activity, say, movement of trade and commerce as the criterion of its operation and if the effect of the operation of such a law is to impede the activity, then the law is a restriction under Article 301. However, if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. This is the way of reconciling the concept of compensatory tax with the scheme of Articles 301, 302 and 304. For example, for installation of pipeline carrying gas from Gujarat to Rajasthan, which passes through M.P., a fee charged to provide security to the pipeline will come in the category of manifestation of regulatory power. However, a tax levied on sale or purchase of gas which flows from that very pip....
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.... to the value of trade and commerce which does not happen in the case of a tax as such. A tax may be progressive or proportional to income, property, expenditure or any other test of ability or capacity (principle of ability). Taxes may be progressive rather than proportional. Compensatory taxes, like fees, are always proportional to benefits. They are based on the principle of equivalence. However, a compensatory tax is levied on an individual as a member of a class, whereas a fee is levied on an individual as such. If one keeps in mind the "principle of ability" vis-à-vis the "principle of equivalence", then the difference between a tax on one hand and a fee or a compensatory tax on the other hand can be easily spelt out. Ability or capacity to pay is measurable by property or rental value. Local rates are often charged according to the ability to pay. Reimbursement or recompense are the closest equivalence to the cost incurred by the provider of the services/facilities. The theory of compensatory tax is that it rests upon the principle that if the Government by some positive action confers upon individual(s), a particular measurable advantage, it is only fair to the commu....
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....CC 657, was rendered by a bench consisting of 3 Judges elucidated the distinction between a "Tax" and a "Regulatory Fee". 153. There, the Hon'ble Supreme Court in Jalkal Vibhag Nagar Nigam case referred to supra, held that the distinction between a "Tax" and a "Fee" has been substantially effaced in the development of our Constitutional Jurisprudence. 154. It held that, at one time, it was possible for Courts to assume that there is a distinction between a "Tax" and a "Fee", while a "Tax" by nature was a compulsory exaction, a "Fee" was collected for a service rendered. 155. There, tax was imposed by the legislature under Section 52 of the Uttar Pradesh Water Supply and Sewerage Act, 1975 on the premises situated within the area of the Jal Sansthan (the appellant). The water tax was levied so long as the Jal Sansthan provided a stand post or water works within a stipulated radius of the premises through which water was made available to the public by the Jal Sansthan. Section 59 of the Uttar Pradesh Water Supply and Sewerage Act, 1975 provided for recovering of cost towards the cost of water supplied by the Jal Sansthan according to its volume or, in lieu thereof on a ....
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.... the area of the jurisdiction of the JalSansthan. The water tax is levied so long as the Jal Sansthan has provided a standpost or waterworks within a stipulated radius of the premises through which water has been made available to the public by the Jal Sansthan. The levy of the tax does not depend upon the actual consumption of water by the owner or occupier upon whom the tax is levied. Unlike the charge under Section 59 which is towards the cost of water to be supplied by the Jal Sansthan according to its volume or, in lieu thereof on a fixed sum, the tax under Section 52 is a compulsory exaction. Where the premises are connected with water supply, the tax is levied on the occupier of the premises. On the other hand, where the premises are not so connected, it is the owner of the premises who bears the tax. The levy under Section 52(1) is hence a tax and not a fee. Moreover, for the reasons that we have indicated above, it is a tax on lands and buildings within the meaning of Entry 49 of List II. 161. Though the above observation in beginning of the paragraph 66 and conclusion of the paragraph 66 may appear to contradict with each other, the fact remains that a fine distinction....
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....red, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for the Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. 12. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. Th....
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....essing officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. 20. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of ever....
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....f quid pro quo is totally irrelevant. (See Corpn. of Calcutta v. Liberty Cinema [AIR 1965 SC 1107 : (1965) 2 SCR 477].) Taxes are raised for augmenting the general revenues of the State and not for any particular purpose - much less for rendering a particular service. 169. The distinction between "Regulatory Fees" and a "Compensatory Fees" was made in State of Tripura Vs. Sudhir Ranjan Nath, (1997) 3 SCC 665. There, it was observed as under:- 14. We next take up the validity of the levy of application fee and licence fee of Rupees one thousand and Rupees two thousand respectively. In our opinion, the High Court was not right in holding that the said fee amounts to tax on the ground that it has not been proved to be compensatory in nature. In our opinion, the fee imposed by sub-rules (3) and (4) is a fee within the meaning of clause (c) of sub-section (2) of Section 41. It is regulatory fee and not compensatory fee. The distinction between compensatory fee and regulatory fee is well established by several decisions of this Court. Reference may be made to the decision of the Constitution Bench in Corpn. of Calcutta v. Liberty Cinema [(1965) 2 SCR 477 : AIR 1965 SC 1107]. ....
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....h the State incurs for administering the regulation and if there is a broad co-relation between the expenditure which the State incurs and the fees charged, the fees could be sustained as reasonable. It also referred to the counter-affidavit of the State to conclude that a good number of officers and employees are engaged in managing the laboratories besides the staff which is posted at the distilleries and so the rate of 7 paise per litre was in order. 18. The High Court in the impugned judgment has drawn a distinction between fees charged for licences, i.e., regulatory fees and the fees for services rendered as compensatory fees. The distinction pointed out by the High Court can be seen in clause (2) of Article 110: "110. (2) A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes." The High Court has quoted from this Court's decision i....
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....se of monitoring the activity of the licensees to ensure that they comply with the terms and conditions of the licence. Dealing with such regulatory fees, this Court in Vam Organic Chemicals Ltd. v. State of U.P. [(1997) 2 SCC 715, 726] (SCC at p. 726) observed that in the case of a regulatory fee, no quid pro quo was necessary but such fee should not be excessive. The same distinction between regulatory and compensatory fees has been made in the case of P. Kannadasan v. State of T.N. [(1996) 5 SCC 670, para 36] (SCC in para 36) as well as State of Tripura v. Sudhir Ranjan Nath [(1997) 3 SCC 665, 673] (SCC at p. 673). 14. In the present case, the Budget Estimate Rules are relied upon by the respondents in order to show that the fees are being utilised for regulatory services. The Hyderabad Municipal Corporation Budget Estimate Rules, 1968 under Rule 6 provide as follows: "6. Sanctioning of the budget.-The Council shall, after satisfying itself on the following points, sanction the budget ordinarily not later than the twentieth of February, each year with such modifications, as it may deem necessary: (a)*** Provided that no part of the receipts under any f....
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....nce' under Criminal Procedure Code and the General Clauses Act, 1897 is defined as any act or omission "made punishable by any law for the time being in force". The proceedings under Section 23(1)(a) of FERA, 1947 are 'adjudicatory' in nature and character and are not "criminal proceedings". The officers of the Enforcement Directorate and other administrative authorities are expressly empowered by the Act to 'adjudicate' only. Indeed they have to act 'judicially' and follow the rules of natural justice to the extent applicable but, they are not 'Judges' of the "Criminal Courts" trying an 'accused' for commission of an offence, as understood in the general context. They perform quasi-judicial functions and do not act as 'courts' but only as 'administrators' and 'adjudicators'. In the proceedings before them, they do not try 'an accused' for commission of "any crime" (not merely an offence) but determine the liability of the contravenor for the breach of his 'obligations' imposed under the Act. They impose 'penalty' for the breach of the "civil obligations" laid down under the Act and not impose any 'sentence' for the commission of an offence. The expression 'penalty' is a word of wi....
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....3-F and on conviction by the 'court' for the said offence imprisonment may follow. 12. In Corpus Juris Secundum, Vol. 85, at p. 580, para 1023, it is stated thus: "A penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for the violation of criminal or penal laws." 13. We are in agreement with the aforesaid view and in our opinion, what applies to "tax delinquency" equally holds good for the 'blameworthy' conduct for contravention of the provisions of FERA, 1947. We, therefore, hold that mens rea (as is understood in criminal law) is not an essential ingredient for holding a delinquent liable to pay penalty under Section 23(1)(a) of FERA, 1947 for contravention of the provisions of Section 10 of FERA, 1947 and that penalty is attracted under Section 23(1)(a) as soon as contravention of the statutory obligation contemplated by Section 10(1)(a) is established. The High Court apparently fell in error in treating the "blameworthy conduct" under the Act as equivalent to the commission of a "criminal offence", overlooking ....
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....maintenance from a toll). (e.g., a license to run a shop). (e.g., late payment fees on credit cards or higher interest on overdue EMIs) 176. In the background of the discussion, I am of the view that the "Late Fee(s)" collected / levied under Section 47(2) of the respective GST Enactments are liable to be held that "Penal Fee(s)", having regard to the following distinguishing characteristics:- a. A "Late Fee" is imposed only upon default, like a "Penalty". b. It operates as a deterrent like a "Penalty". c. It has no quid pro quo unlike a "Regulatory fee". d. It increases with the period of default like a "Penalty". e. It merely has a Civil Consequences like a "Penalty". f. It is intended to ensure discipline, to promote timely filing and to enforce future compliance. 177. A "Fee" under a "Tax" statute becomes akin to a "Penalty" when it is imposed solely for breach of a statutory obligation cast under the statute. It lacks quid pro quo to operate as a deterrent. It has a civil consequence like a "Penalty". It may be disproportionate to any administrative cost. Notwithstanding its ostensible purpose, it has to b....
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.... as may be specified in the Notifications. These Notifications are issued in "Public Interest". Section 11 of the respective GST Enactments also uses similar expression. Notifications under Section 11 of the respective GST Enactments is / are also issued in "Public Interest". WAIVER NOTIFICATION ISSUED UNDER MITIGATING CIRCUMSTANCES 184. Under Section 128 of the respective GST Enactments, the Government is empowered to waive in part or full, any "Penalty" referred to in Section 122 or Section 123 or Section 125 or any "Late Fee" referred to in Section 47 for such class of tax payers and under such mitigating circumstances as may be specified therein on the recommendations of the GST Council. 185. The decisions of the Courts including that of the Hon'ble Supreme Court rendered in the context of "Exemptions" cannot be borrowed and applied stricto sensu in the context of extensions / relaxations / waivers, Notification issued under Section 128 of the respective GST Enactments. 186. Section 11 of the respective GST Enactments which has been extracted above is pari materia with Section 25 of the Customs Act, 1962, Section 5 of the Central Excise Act, 1944 and Section 93 ....
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....ve Notification. 193. They are however questioning the imposition of "General Penalty" under section 125 of the respective GST Enactments. Since it has been already concluded that "Late Fee" under Section 47(2) of the respective GST Enactments was penal in nature, there cannot be imposition of "General Penalty" under Section 125 of the respective GST Enactments over and above the "Late Fee" levied at concessional rate under the above-mentioned Notifications. 194. I am also inclined to adopt the above ratio in Tvl.Jainsons Casters and Industrial Products referred to supra. I therefore hold that there is no scope for imposing "General Penalty" under section 125 of the respective GST Enactments over and above the "Late Fee" levied on them at concessional rate under the above-mentioned Notifications. 195. In the light of the above observations, W.P.Nos.3540, 3567, 3570, 3902, 3966 of 2024 from Table-3 deserve to be allowed. 196. The Petitioner in Table-4B [W.P.No.9867 of 2024] has been levied with "Late Fee" of Rs.1,17,038/- (Rs.58,519 x 2). The said Petitioner had filed the "Annual Return" on 15.06.2023. This filing of "Annual Return" was within the time limit prescribed unde....
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....above Notification issued under Section 128 of the respective GST Enactments. 203. To single them out would amount to hostile discrimination and contrary to Article 14 of the Constitution of India. To suspend "Late Fee" would also lead to mistrust in the tax administration and would be an anathema to Article 14 of the Constitution of India. 204. To single out would amount to arbitrary exercise of law failing the test of arbitrariness recognized under Article 14 of the Constitution of India. 205. The Division Bench of the Himachal Pradesh High Court in the case of M/s.R.T.Pharma Vs. Union of India and others, while dealing with a similar issue arising out of delay in filing of the "Annual Returns" in GSTR-9 under Section 39 of the respective GST Enactments held that it would be unjust to deny a "Late Fee", waiver to a taxpayer who filed their Goods and Services Tax (GST) Annual Returns (GSTR-9 and GSTR-9C) before a specific Amnesty Notification was issued in Notification No.7/2023-Central Tax dated 31.03.2023, and was amended by Notification No.25/2023-Central Tax dated 17.07.2023. 206. Therefore, the benefit of the above Notifications namely Notification No.7/2023- Cent....