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Tvl R P G Traders Vs State Tax Officer

Date: December 11, 2025

Court: High Court
Bench: Madras
Type: Writ Petition
Judge(s)/Member(s): KRISHNAN RAMASAMY
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Subject Matter

General Penalty under Section 125 Inapplicable When Late Fee Levied under Section 47

Penalty

Summary

The High Court has partially allowed the writ petition, setting aside the general penalty levied under Section 125 of the TNGST Act, 2017. The Court ruled that such a penalty is not applicable when late fees have already been imposed under Section 47. Furthermore, the Court modified the calculation of the late fee, directing the petitioner to pay a revised amount.

Summary of Facts and Dispute:
  1. Impugned Action: The 1st respondent passed an order (GSTIN 33AKSPG5898G1ZL/2020-21 dated 26-02-2025) levying a penalty fee of Rs. 75,025/- CGST and Rs. 75,025/- SGST (total Rs. 1,50,050/-) along with a general penalty of Rs. 50,000/- for failure to file annual returns, which led to the freezing of the petitioner's bank account.
  2. Petitioner's Argument: The petitioner argued that only late fees could be levied under Section 47 of the TNGST Act, and the general penalty under Section 125 is applicable only when no other penalty has been levied under Section 47. The petitioner also contended that the order was passed without proper enquiry under Section 73 of the GST Act.
  3. Core Question of Law: Can a general penalty under Section 125 of the TNGST Act, 2017, be levied when a late fee has already been imposed under Section 47 for failure to file annual returns, and how should the late fee under Section 47(2) be correctly calculated and apportioned?
Key Legal Issues & Findings:
Applicability of General Penalty under Section 125 vis-à-vis Late Fee under Section 47

The Court examined the provisions of Section 47 and Section 125 of the TNGST Act, 2017.

  • Dual Penalty Bar: The provision under Section 125 of the Act, which provides for a general penalty, applies only in cases where no specific penalty has already been levied under Section 47 of the Act.
  • Consequence of Prior Levy: Since late fees had already been levied against the petitioner under Section 47 for the failure to furnish annual returns, the subsequent imposition of a general penalty of Rs. 50,000/- under Section 125 was deemed inapplicable and set aside by the Court.
Correct Calculation of Late Fee under Section 47(2)

The Court interpreted the methodology for calculating late fees as per Section 47(2) of the Act.

  • Maximum Limit for Late Fee: As per Section 47(2), a registered person who fails to furnish a return required under Section 44 is liable to pay a late fee of Rs. 100 for every day the failure continues, subject to a maximum amount calculated at 0.25% (a quarter per cent) of their turnover in the State.
  • Incorrect Calculation by Respondent: The first respondent had initially calculated the total late fee as Rs. 1,50,050/- and split this amount equally into Rs. 75,025/- each for CGST and SGST, applying the maximum limit after the split.
  • Corrected Calculation: The Court clarified that if the calculated maximum late fee is a total amount (e.g., Rs. 75,025/-), this total amount should then be equally divided between SGST and CGST. Therefore, the correct late fee is Rs. 37,512.50/- for SGST and Rs. 37,512.50/- for CGST.
  • Revised Total Late Fee: The total revised late fee payable by the petitioner was thus fixed at Rs. 75,025/-.
Ruling:
  1. Outcome: The general penalty of Rs. 50,000/- levied under Section 125 of the Act is set aside. The late fee calculation under Section 47(2) is modified, reducing the total payable late fee from Rs. 1,50,050/- to Rs. 75,025/-.
  2. Directions: The petitioner is directed to pay the modified late fee of Rs. 75,025/- to the authorities. Upon production of proof of payment, the State Bank of India, Manachanallur Branch, is directed to defreeze and permit the petitioner to operate their bank account.
  3. Liberty: There shall be no order as to costs, and the connected miscellaneous petition is closed. The Revenue may pursue other appropriate proceedings if deemed necessary under law.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This Writ Petition is filed challenging the impugned order passed by the 1st respondent vide his order in GSTIN 33AKSPG5898G1ZL/2020-21 dated 26-02-2025 and quash the same as it is illegal, without jurisdiction and in gross violation of Principles of Natural Justice and further direct the 2nd respondent to defreeze the Saving bank account No 30603963135 of the petitioner in State Bank Of India, Tiruvarur Branch, Tiruvarur,

2. Mr.R.Suresh Kumar, learned Additional Government Pleader takes notice for the first respondent and Mr.V.Balasubramaninan, learned counsel takes notice for the second respondent.. By consent, this Writ Petition is taken up for final disposal at the admission stage itself.

3. The learned counsel appearing for the petitioner would submit that since the petitioner failed to file its annual returns, the first respondent passed the impugned order by levying the penalty fee of Rs.75,025/- CGST and Rs.75,025 of SGST, totalling to Rs.1,50,050/-along with general penalty of Rs.50,000/-. He further submits that as per Section 47 of the TNGST Act, 2017 (hereinafter referred to as “the Act”), only late fee can be levied. Further, the provision under Section 125 of the Act will apply only in the case where no penalty is levied under Section 47 of the Act. He further submits that without proper enquiry and verification of records as contemplated under Section 73 of the GST Act, the 1st respondent has passed the impugned order. Therefore, the impugned order is liable to be quashed. In this regard, the petitioner has also produced the order passed by the Principal Bench of this Court in W.P.No.36614 of 2024, dated 04.02.2025.

4. The learned Additional Government Pleader appearing for the first respondent would submit that since the petitioner failed to file its annual returns, the impugned order has been passed levying the late fee along with general penalty. Therefore, he prays for dismissal of the Writ Petition.

5. On a perusal of the records, it is seen that since the petitioner failed to file its annual returns, as per Section 47 of the Act, the first respondent has levied the late fee of Rs.75,025/- CGST and Rs. 75,025/- of SGST, totalling to Rs.1,50,050/-. Further, under Section 125 of the Act, the first respondent has levied the general penalty of Rs.25,000/- CGST and Rs.25,000/- of SGST, totalling to Rs.50,000/-. This Court is of the view that the provision under Section 125 of the Act, apply only in the case where no penalty is levied under Section 47 of the Act. However, in this case, already late fee has been levied under Section 47 of the Act. Therefore, the question of levying general penalty under Section 125 of the Act will not apply. Therefore, the same is liable to be quashed. Accordingly, the levying of general penalty of Rs.50,000/- is hereby set aside.

6. With regard to the levying of late fee of Rs.1,50,050/- is concerned, this Court is of the view that as per Section 47(2) of the Act, any registered person, who fails to furnish the return required under Section 44 of the Act, shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State. According to the first respondent, they have calculated the late fee at Rs.1,50,050/- and divided the said amount for SCGST and CGST. Such interpretation of the first respondent is wrong. If the first respondent calculated the late fee at Rs.75,025/-, at the rate of 25%, the total turnover or Rs.100/- per day whichever is higher and such amount has to be divided for SCGST and CGST. Therefore, if Rs.75,025/- is taken into consideration as late fee, the late fee would be at Rs.37,512.50/-. Accordingly, the late fee calculated by the first respondent is modified as Rs.37,512.50/- SGST and Rs.37,512.50/-CGST. Therefore, the petitioner is directed to pay the late fee of Rs.75,025/-.

7. The learned counsel appearing for the 2nd respondent would submit that the petitioner’s account has been wrongly mentioned in the Writ Petition. The petitioner is having bank account in State Bank of India, Manachanallur Branch.

8. The learned counsel appearing for the petitioner would submit that in view of the impugned order, the petitioner’s account has been froze and therefore, the petitioner seeks a direction to defreeze the bank account of the petitioner. Accordingly, upon payment of late fee of Rs.75,025/- by the petitioner to the authorities concerned, the State Bank of India, Manachanallur Branch is directed to permit the petitioner to operate the bank account, upon production of payment of late fee.

9. With the above observations, this Writ Petition is disposed There shall be no order as to costs. Consequently, connected miscellaneous petition is closed.

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