GST Late-Fee Amnesty Benefit Cannot Be Denied To Early Annual Return Filers: Madras High Court

The Madras High Court has held that GST-registered persons who filed their annual returns before the amnesty scheme cannot be denied its benefit merely because the GST Council did not address their situation in its meeting.

The amnesty scheme, notified in March 2023, capped the maximum late fee for delayed filing of GSTR-9 (annual GST returns) at Rs 10,000 per financial year for the financial years 2017-18 to 2021-22.

A single-judge bench of Justice C Saravanan observed that such taxpayers “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,”

The court added that denying them the benefit of a partial waiver of the late fee “is to treat them unfairly.”

The ruling came in a batch of writ petitions filed by traders and small businesses who were hit with heavy late fees and penalties for delayed filing of GSTR-9 (annual GST returns) for the financial years 2017-18 to 2021-22.

Many of them had filed their returns either much before April 1, 2023, or after August 31, 2023, and were later issued demands imposing very high late fees under Section 47 of the GST laws, along with an additional general penalty under Section 125.

The petitioners argued that once a late fee for delayed filing of annual GST returns is levied under Section 47, no separate general penalty can be imposed for the same default. They also said the amnesty scheme, which capped the late fee at Rs 10 thousand per financial year, was meant to ease the burden on taxpayers and should not exclude those who had already filed their returns before it was notified.

The tax department opposed the petitions, saying the notifications clearly restricted the benefit to non-filers who submitted their returns within the specified window. It added that the waiver could not be extended beyond what was expressly provided.

Rejecting this stand, the court noted that the GST Council itself had not addressed the position of taxpayers who had filed their annual returns before the amnesty period. The bench said denying them partial waiver of late fees would be unjust and that such taxpayers “cannot be singled out” simply because they complied before the dates mentioned in the notifications.

The court therefore extended the benefit of the cap on late fees to taxpayers who filed GSTR-9 (annual GST returns) before April 1, 2023, and quashed any excess late fee and general penalty imposed on them.

For those who filed after the amnesty period, the court declined to extend the capped late-fee benefit but set aside the general penalty, holding that the late fee itself was penal in nature.