HC Extends GST Amnesty to Early GSTR-9 Filers; Sets Aside General Penalty Where Late Fee Is Paid

In Kandan Hardware Mart vs Assistant Commissioner (ST), a batch of writ petitions challenged the levy of GST late fee under Section 47 and general penalty under Section 125 of the CGST/TNGST Acts, especially in cases where taxpayers had filed their GSTR-9 (Annual Returns) either before or outside the amnesty period specified in Notification No. 07/2023-CT dated 31.03.2023 (as amended by Notification No. 25/2023-CT).

One problem for which writ has been filed is that The petitioners have been given benefit of GST Amnesty Scheme Notifications. However, they have been imposed with “General Penalty” under Section 125 of the Act. They, therefore, challenge the same, primarily in line with the reasoning adopted by this Court in Tvl.Jainsons Castors and Industrial Products, Represented by its Authorized Representatives, Chennai Vs. The Assistant Commissioner (ST), Nandanam, Chennai vide order dated 04.02.2025 inW.P.No.36614 of 2024.

“High Court held that “In Tvl.Jainsons Casters and Industrial Products referred to supra in W.P.No.36614 of 2024 rendered on 04.02.2025, this Court held that there is no scope for imposing “General Penalty” under Section 125 of the respective GST Enactment once “Late Fee” under Section 47 has been levied under these Enactments. “Late Fee” though not described as a “Penalty” is penal in nature; and the imposition of “Penalty” consequence without any element of mens rea is unjustifiable. In my view, there is no scope for levying both on a Registered Person.”

Another Problem was that the petitioner who have filed had filed the returns before the cut-off date prescribed in GST Amnesty Scheme [Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central Tax dated 17.07.2023] and have paid the late fees, were denied the benefit of the said Notification

High Court held that they cannot be denied the benefit of the said Notification, merely because in the 49th GST Council Meeting held on 18.03.2023, GST Council failed to address the issue.

“201. To deny the benefit of partial waiver from payment of “Late Fee” under the above Notification particularly to these Petitioners in Table-4A, who had filed the “Annual Returns” before the dates specified in Notification No.7/2023-Central Tax dated 31.03.2023 as amended by Notification No.25/2023-Central tax dated 17.07.2023. Challenge to the levy of “Late Fee” is to treat them unfairly. They cannot be singled out is justified as they have filed the “Annual Returns” before the cut-off dates stipulated in these Notifications.

202. Further, if the GST Council had found mitigating circumstances to give partial waiver from payment of “Late Fee” to those Registered Persons who had failed to file “Annual Returns” and could file their “Annual Returns” between 01.04.2023 and 31.08.2023 in terms of the above Notifications. I see no reason why the Petitioners in Table-4A who had filed the “Annual Returns” before the dates mentioned in the above Notifications should not be given the benefit of partial waiver in terms of the above Notification issued under Section 128 of the respective GST Enactments.”