The court observed that the GST authority had exceeded the limit while passing the order under Section 125, and the same was against the statutory provisions.
Nidhi | Jan 9, 2026 |
General Penalty u/s 125 cannot be imposed for late filing of GST Return: HC
The Allahabad High Court quashed a GST penalty order passed under section 125 of the GST Act, 2017, holding that the tax authorities cannot impose a penalty beyond the prescribed limit under the law.
The GST department had issued an order levying a penalty on the petitioner, M/S Accurate Engineering, for not filing the returns on time. The order was passed under Section 125 of the GST Act of 2017. The petitioner claimed that the maximum penalty under Section 125 can be Rs 25,000, and the GST authority must also explain the reasons.
Additionally, the petitioner’s contention was also that Section 125 of the GST Act is a residuary clause, and it is used when there is a violation for which no specific rules are covered under any provisions. Meanwhile, the default related to the non-filing of a return is covered under Section 47 of the GST Act of 2017.
The petitioner filed an appeal against this order before the lower authority, but it was dismissed on the grounds of delay, without examining the merits of the case. Therefore, the Petitioner filed a writ before the Allahabad High Court arguing that the penalty order passed by the GST Department is invalid.
The petitioner company argued that it must be charged under section 47 of the GST Act, under which the penalty is limited to Rs 100 per day of delay, subject to a maximum of Rs 5,000. The petitioner argued that imposing a higher penalty under section 125 of the Act, that too beyond the prescribed limit, makes the order illegal and unsustainable.
The High Court agreed with the contention of the petitioner. The court observed that the GST authority had exceeded the limit while passing the order under Section 125, and the same was against the statutory provisions, making the order illegal. The court also criticised the dismissal of the appeal against this illegal order, just because it was filed late.
Therefore, the High Court quashed and set aside the GST penalty order and remanded the matter to the lower authority for fresh consideration after giving an opportunity of hearing to the petitioner.
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