Notice demanding Late Fees on GSTR-9C filed before commencement of GST Amnesty Scheme unjust: HC

Kerala High Court in the matter of Anishia Chandrakanth vs The Superintendent WP(C) No. 30644 of 2023 dated 9th April 2024 has said that GST notices for non payment of late fee for belated GSTR 9C, filed by the taxpayers before 01.04.2023, the date on which one time amnesty commences are unjust and unsustainable.

The Petitioner has been issued a Demand notice for Late fees for late filing of GST Return GSTR-9C. Demand of late fee of Rs. 2,93,600/- under Section 47(1) of the CGST / SGST Act, has been proposed, after adjusting the late fee of Rs. 57,600/- paid by the petitioner.

Submission of Petitioner with GST Department:

The petitioner submitted that a registered person is liable to pay the late fee under Section 47(2) only when he fails to furnish the return in FORM GSTR-9 under Section 44 of the CGST / SGST Act.

GSTR-9C is only a reconciliation statement to be filed along with the annual return and FORM GSTR-9C is not a return as contemplated under Section 44 of the CGST / SGST Act.

Late fee is leviable upto the late filing of the GSTR 9 return and not the GSTR-9C reconciliation statement.

The GST Department did not accept the above-mentioned submissions and thus the demand was confirmed against the petitioner.

Submission of Petitioner with High Court:

Learned counsel for the petitioner has submitted that the Government has issued Notification No.7/2023-CT dated 31.03.2023, providing for an Amnesty Scheme with respect to the non filers of GSTR-9 returns in exercise of the powers conferred under Section 128 of the CGST / SGST Act on the recommendation of the GST council, whereby, for non filers of the returns for the financial years 2017-2018 to 2021-2022, time for filing the returns in GSTR-9 and 9C was initially provided upto 30.06.2023. By the subsequent notification No.25/2023, i.e., 30.06.2023, it was extended up to 17.07.2023. Under the said Amnesty Scheme, the late fee in excess of Rs.10,000/- to be paid under Section 47 of CGST / SGST Act, with respect to the returns for the financial years 2017-2018 to 2019-2020 has been waived.

It is submitted that the petitioner had filed the annual return for the said year as early as in the years 2020-2021 and before the commencement of the Amnesty Scheme, i.e., on or before the commencement of the Amnesty Scheme with effect from 01.04.2022 and therefore, it is submitted that the petitioner should also be extended the benefit of the said Amnesty Scheme.

Submission of Department with High Court:

On the other hand, Mr. Sreelal Warrier, the learned Standing counsel appearing for the respondents in the writ petitions has supported the stand of the revenue that the Amnesty Scheme is applicable only to the persons who had not filed the return for the financial years 2017-2018, 2018-2019 and 2019-2020, and not the persons who had filed the return for the said financial years before 01.04.2023. The dealers who did not file the returns for the financial year (s) 2017-2018, 2018-2019 and 2019-2020 but furnished the returns on or after 01.04.2023 upto 31.08.2023, the late fee would be limited to Rs.10,000/- only. This Amnesty scheme is not available to the persons who had already filed their return before 01.04.2023, for the said financial years. It is also submitted that under the unamended Section 44 of the CGST / SGST ACT, the FORM GSTR 9 and 9C were required to be filed together and therefore, if the GSTR-9C was not filed along with GSTR-9, it could not be said that the dealer had filed the annual return as contemplated under the provisions of Section 44 of the CGST / SGST Act. It is therefore, submitted that the date of filing of the GSTR-9C would be the relevant date for calculating the late fee, if the same is not filed along with the GSTR-9.

Discussion

It is not in dispute that the GST portal does not support payment of late fee for late filing GSTR-9C. The GST portal enables to charge late fee for GSTR-9 only.

The other returns for which the late fee is collected are GST 3B (monthly return) GSTR 4( annual return of composition levy) GSTR 5 (return for non resident taxable person), GSTR 5A (summary return reporting OIDAR service from outside India made to non taxable persons in India), GSTR-6 (monthly return by input service distributor), GSTR 7( returns for persons deducting TDS), and GSTR-8 (monthly returns for e-commerce operators). Annual return GSTR-9 filed without 9C may be deficient attracting general penalty. However, late fee cannot be made applicable for regularising the GSTR9 by filing GSTR9C.

As mentioned above GST council in 49th meeting in Agenda 4(iv) agreed for rationalisation of late fee for delayed submission of GSTR-9 annual return and amnesty for non-filers of   GSTR-9   among   others   accepting   the recommendation of law committee. The late fee as well as its upper limit were thereby substantially reduced for two turnover slabs- i) up to Rs. Five Crores and ii) Rs. Five Crores to Rs. Twenty Crores as per notification No.7/2023 dated 31.03.2023. One time Amnesty for non-filers of GSTR 9 is also given for the first time as per the same notification following the council recommendation. Late fee in excess of Rs.10,000/- stands waived and this amnesty covers five financial years 2017-2018 to 2021-2022. The period for submitting return under the amnesty was from 01.04.2023 to 31.08.2023 as noted above by the Notification No.25/2023 dated 17.07.2023, issued in exercise of the powers conferred under Section 128 of the CGST / SGST Act.

Order of the Court:

When the Government itself has waived late fee under the aforesaid two notifications Nos.7/2023 dated 31.03.2023 and 25/2023 dated 17.07.2023 in excess of Rs.10,000/-, in case of non-filers there appears to be no justification in continuing with the notices for non payment of late fee for belated GSTR 9C, that too filed by the taxpayers before 01.04.2023, the date on which one time amnesty commences.

In view of the aforesaid discussion, I am of the view that notices are unjust and unsustainable to the extent it sought to collect late fee for delay in filing GSTR 9C. However, it is made clear that the petitioners will not be entitled to claim refund of the late fee which has already paid by them over and above Rs.10,000/-