GST: When Section 47 Late Fee Is Already Paid, Additional Penalty U/s 125 Cannot Be Imposed, Says HC

Allahabad High Court held that once late fees under GST Section 47 are paid, imposing an additional penalty under Section 125 is unjustified. The Court quashed the penalty order and allowed the petition in favour of the taxpayer.

M/S Sunita Enterprises (through proprietor Vimlesh Kumar Gupta) has filed a writ petition in the Allahabad High Court challenging several orders imposing a penalty on the petitioner under Section 125 of the U.P. Goods and Services Act, 2017. The case has been heard by the bench comprising Honourable Justice Shekhar B. Saraf and Justice Manjive Shukla.

The petitioner had lately filed its GST return and therefore paid the late fee along with furnishing the return under Section 47 of the Act. The petitioner further argued that the tax authority cannot impose a general penalty on him under Section 125 of the Act in the present case because the specific penalty (like late fees under Section 47) has already been paid. To support his argument, the petitioner cited a Madras High Court judgement in the case titled TVL. Jainsons Castors and Industrial Products Vs Assistant Commissioner (ST), wherein the judges held that penalties cannot be imposed under both Section 47 and Section 125 for the same default.

Section 125 of the CGST Act 2017, discusses about a general penalty upto Rs. 25,000 (CGST + SGST/UTGST) for violating any provision of the GST Act or rule where no specific penalty has clearly been provided. When the court heard the case and analysed the documents furnished by the petitioner, it observed that since the petitioner had already paid the late fee, imposition of a general penalty will be a really harsh action and is also not fair as per the law.

Considering the aforementioned findings, the court quashed the impugned order dated December 27, 2024, imposing a general penalty on the petitioner under Section 125 of the Act and held in favour of the petitioner.