Facts of the Case:

In this case, the petitioner challenged an order imposing both Late Fee under Section 47 of the Tamil Nadu GST Act, 2017 (TNGST Act) and General Penalty under Section 125 for failure to file the Annual Return for Financial Year 2020-21 within the prescribed time. The petitioner contended that the authorities had already levied and recovered Late Fee for the delay and had additionally imposed General Penalty under Section 125, besides attaching the petitioner’s bank account and recovering ₹2,38,802/-.

It was argued that Section 125, being a residuary penalty provision, can be invoked only where no specific penalty is prescribed under the Act. Since delayed filing of returns is specifically covered under Section 47, the simultaneous levy of General Penalty was impermissible. The petitioner relied upon the earlier Division Bench decision in Ms. Kandan Hardware Mart v. Assistant Commissioner (ST), wherein the Court had examined the legality of imposing both Late Fee and General Penalty for delayed filing of annual returns.

Issue:

Whether General Penalty under Section 125 of the GST enactments can be imposed for delayed filing of Annual Returns when a specific penal provision in the form of Late Fee under Section 47 already exists for the same default.

Held That:

The Madras High Court held that the impugned order imposing General Penalty under Section 125 of the TNGST Act, 2017 could not be sustained in law because the default alleged against the petitioner, namely delayed filing of Annual Returns for FY 2020-21, was already specifically dealt with by Section 47 of the GST enactments, which prescribes Late Fee for such delay. The Court observed that the controversy was no longer res integra and stood squarely covered by the earlier Division Bench judgment in Ms. Kandan Hardware Mart v. Assistant Commissioner (ST).

The Court reiterated the settled principle that Section 125 is a residuary penal provision and can be invoked only in situations where no specific penalty is prescribed elsewhere under the GST law. Once the legislature has consciously enacted a specific consequence for delayed filing of returns under Section 47, the authorities cannot resort to the general penalty provision under Section 125 for the very same omission. Permitting simultaneous imposition of Late Fee and General Penalty would amount to penalizing the taxpayer twice for the same default, which is contrary to the statutory scheme.

Relying on paragraphs 205 to 212 of the decision in Kandan Hardware Mart, the Court emphasized that taxpayers who are liable to pay Late Fee under Section 47 cannot be subjected to General Penalty under Section 125 merely because the return was filed belatedly. The Court noted that the earlier judgment had categorically held that where the GST enactments provide a specific penal consequence, recourse to the residuary penalty provision is impermissible.

Applying the aforesaid ratio, the Court concluded that the petitioner’s liability, if any, was confined only to payment of Late Fee under Section 47. Consequently, the levy of General Penalty under Section 125 for the Assessment Year 2020-21 was declared unsustainable and liable to be set aside. The Court partially allowed the writ petition and quashed the impugned demand to the extent it imposed General Penalty and sought to recover amounts in excess of the permissible Late Fee.

Case name: NKR Traders v. State Tax Officer dated 21.05.2026

To read the complete judgement 2026 Taxo.online 1588