M/S Ahsan Enterprises Thru. Partner Mohd. Jamil Zaidi vs. State Of U.P. Thru. Addl. Chief Secy. Tax And Registration Lko. And 3 Others

Held

The Court held that the impugned order dated 28.09.2024 and the appellate order dated 24.09.2025 were per se against the statutory provisions of the GST Act, 2017. The Court noted that the original authority had quoted Section 125 of the Act but exceeded the prescribed penalty limit of Rs. 25,000/-. The Court found that the violation of non-filing returns in time is specifically covered by Section 47 of the Act, which prescribes a lesser penalty. The dismissal of the appeal on the ground of limitation, without correcting the initial illegality, would perpetuate such illegality. Therefore, the Court quashed and set aside both the impugned order and the appellate order. The matter was remitted to the respondent No.4 (the appellate authority) to pass fresh orders after affording the petitioner an opportunity of hearing and considering their submissions, without granting unnecessary adjournments. The ratio decidendi is that penalties imposed under Section 125 of the GST Act must adhere to the statutory limits and cannot be levied for violations specifically covered by other sections of the Act with different penalty provisions. The Court expressly left undecided any issue not covered by the prior judgment.

Facts

The petitioner, M/S Ahsan Enterprises, filed a writ petition challenging an order imposing tax dated 28.09.2024 and a first appellate order dated 24.09.2025. The petitioner sought to quash these orders and direct the first appellate authority to entertain their appeal. The petitioner argued that their case was identical to a previous case, Writ Tax No. 1409 of 2025 (M/s Techspa India Thru Proprietor Mrs. Gulnaz Shahab Vs. State of U.P. and 2 others), decided by the same High Court on 02.12.2025. In that prior case, the appeal was dismissed on grounds of limitation, affirming an order imposing penalty under Section 125 of the GST Act, 2017. The petitioner in the prior case contended that the penalty imposed exceeded the statutory maximum of Rs. 25,000/- and that the alleged violation, non-filing of returns, was covered by Section 47 of the Act, which prescribes a lesser penalty.

Key Issues

1. Whether the penalty imposed under Section 125 of the GST Act, 2017, can exceed the maximum limit of Rs. 25,000/-, as stipulated in the said section, when the alleged violation pertains to non-filing of returns, which is specifically addressed by Section 47 of the Act? 2. Whether an appeal dismissed solely on the grounds of limitation, without condoning the delay, perpetuates an illegality if the original order imposing penalty is itself contrary to statutory prescriptions? Petitioner's Arguments: The petitioner argued that the penalty imposed under Section 125 of the GST Act, 2017, was beyond the prescribed maximum of Rs. 25,000/-. They contended that the violation of non-filing returns in time is covered by Section 47 of the Act, which prescribes a penalty of Rs. 100/- per day, up to a maximum of Rs. 5,000/-. Therefore, imposing penalty under Section 125 for this default, and exceeding the limit, vitiates the order. Furthermore, the dismissal of the appeal on limitation grounds, without addressing the illegality in the original order, denied them a valuable opportunity and resulted in vitiated orders. Revenue's Arguments: The learned State Counsel fairly submitted that the case of the applicant is squarely covered by the judgment and order dated 02.12.2025 passed in Writ Tax No. 1409 of 2025.