17.01.2023: Late Fee Not To Be Charged When the Returns Could Not Be Filed Due To Wrongful Cancellation Of The Registration By The Department – Calcutta High Court

The Hon’ble High Court of Calcutta vide its order dated 22.12.2022 in the matter of M/s Modicum Enterprise (OPC) Private Limited Vs. Deputy Commissioner of State Tax & Another in M.A.T. No. 1828 of 2022 with I.A. No. CAN 1 of 2022, allowed the appeal filed by the Assessee/Appellant and restrained the revenue/respondents from demanding any late fee for non-filing of returns.  It was found by the Hon’ble Court that the Appellant could not filed the returns due to cancellation of registration by the revenue authority, which was later on found incorrect and was restored by the Appellate Authority.  Therefore, the appellant cannot be penalised by demanding late fee and Section 47 would not be attracted in the present case.

The Appellant/writ petition filed the intra-court appeal before the Hon’ble High Court against the order dated 28th September, 2022 in W.P.A. 21708 of 2022, whereby the learned Single Judge declined to provide interim order. 

Facts of the Case: –

  • The appellant/writ petitioner was a registered dealer under the provisions of the Central Goods and Services Tax Act, 2017 and the rules framed thereunder. The registration was cancelled on the ground that the appellant was a non-existing dealer.
  • Aggrieved by the said cancellation, the appellant/writ petitioner preferred an appeal before the Senior Joint Commissioner of State Tax, Howrah Circle, who by an order dated 22nd July, 2022, allowed the appeal of the appellant with a clear finding that the ground on which the cancellation was made, was incorrect.
  • Thereafter, in pursuance of the order of the Appellate Authority, the cancellation of the registration was revoked by an order dated 27th January, 2020 and the registration was restored.
  • However, when the appellant attempted to file his returns, there was a demand of Rs.5,000/- per return stating that it is late fee payable under Section 47 of the Act.

Held: –

  • The Hon’ble Court after considering the submissions made, facts of the case and on perusal of Section 47, found that in terms of the sub-Section (1) of Section 47, any registered person, who fails to furnish return by the due date shall pay late fee of 100 rupees every day during which such failure continues subject to a maximum amount of Rs.5,000/-. Sub-Section (2) states that any registered person, who fails to furnish the return required under Section 44 is also required to pay such late fee.
  • That in the instant case, the question which needs to be decided is ‘whether the late fee can be demanded from the appellant’. There is no dispute that Section 47 deals with a person, who fails to furnish the returns either under Section 39 or Section 45 or Section 44.  However, the revenue does not allege that the appellant failed to file its return within due dateThe reason for non-furnishing the return is cancellation of the registration on the ground that the appellant is a non-existing dealer.
  • Moreover, the said order of cancellation was set aside by the appellate authority holding that the order was passed on a factually incorrect premise. In the facts and circumstances of the case, the appellant cannot be penalised by demanding late fee and Section 47 would not be attracted.
  • Therefore, it was held by the Hon’ble Court that the demand of late fee from the appellant @ Rs.5,000/- per return is without jurisdiction and not tenable in the eye of law.

The Hon’ble Court with the above findings, disposed of the appeal as well as the writ petition by restraining the respondents from demanding any late fee from the appellant in respect of the returns, which they intend to file and to facilitate the process of filing the return, the nodal officer in the Goods and Services Tax Help Desk, Kolkata is directed to render necessary assistance so that the appellant will be able to file the return without the payment of late fee. This direction shall be complied with within a period of three weeks from the date of receipt of the server copy of this order.  Further, no fresh proceeding for cancellation or registration would not be initiated by the respondents.

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