Tvl R P G Traders vs. The State Tax Officer

Held

The Court held that the levy of a general penalty under Section 125 of the TNGST Act, 2017, is not applicable when late fees have already been levied under Section 47 of the Act. The Court reasoned that Section 125 is intended for situations where no specific penalty is prescribed under other sections, and since late fees were levied under Section 47, the general penalty under Section 125 was inappropriate. Therefore, the general penalty of Rs. 50,000/- was quashed. Regarding the late fee, the Court found the respondent's calculation to be incorrect. As per Section 47(2), the late fee is Rs. 100/- per day or 0.25% of the turnover, whichever is higher, and this amount is to be divided for CGST and SGST. The Court modified the late fee to Rs. 37,512.50/- for SGST and Rs. 37,512.50/- for CGST, totaling Rs. 75,025/-, and directed the petitioner to pay this amount. Upon payment, the bank account was to be defreezed.

Facts

The petitioner, Tvl R P G Traders, filed a writ petition challenging an order dated 26.02.2025 passed by the State Tax Officer, Lalgudi Assessment Circle. The impugned order imposed a penalty of Rs. 75,025/- CGST and Rs. 75,025/- SGST (totaling Rs. 1,50,050/-) for failure to file annual returns, along with a general penalty of Rs. 50,000/-. The petitioner contended that only late fees could be levied under Section 47 of the TNGST Act, 2017, and Section 125 of the Act applies only when no penalty is levied under Section 47. The petitioner also argued that the order was passed without proper inquiry as contemplated under Section 73 of the GST Act. The State Tax Officer submitted that the penalties were levied due to the petitioner's failure to file annual returns. The petitioner also sought a direction to defreeze their savings bank account.

Key Issues

1. Whether the levy of a general penalty under Section 125 of the TNGST Act, 2017, is permissible when late fees have already been levied under Section 47 of the same Act? 2. Whether the calculation of late fees under Section 47(2) of the TNGST Act, 2017, by the respondent authority is correct? Petitioner's Arguments: The petitioner argued that Section 125 of the TNGST Act, 2017, is applicable only when no penalty is levied under Section 47. They contended that the impugned order was passed without proper inquiry under Section 73 of the GST Act and relied on a previous order of the High Court in W.P.No.36614 of 2024 dated 04.02.2025. Revenue's Arguments: The learned Additional Government Pleader for the first respondent argued that the impugned order was passed levying late fee along with a general penalty due to the petitioner's failure to file annual returns, and therefore, prayed for the dismissal of the writ petition.