Sri Balaji Agency vs. The Commissioner Of State Tax

Facts

The petitioner, Sri Balaji Agency, filed a writ petition challenging an order dated 20.05.2026 passed by the Assistant Commissioner of Service Tax (ST). This order confirmed a show cause notice and imposed a late fee of Rs. 2,59,200/- under Section 47(2) of the CGST/TNGST Act, 2017, and a penalty of Rs. 50,000/- under Section 125 of the Act for the financial year 2020-21. The petitioner's challenge was based on a previous order from this Court dated 26.03.2025 in other writ petitions filed against the service recipient, Bharat Sanchar Nigam Limited (BSNL), which directed BSNL to pay outstanding statutory dues. Additionally, an assessment order dated 08.01.2025 for the same financial year, passed under Section 74, was under challenge in a separate writ petition and had been granted an interim stay.

Held

The Court held that the imposition of late fee under Section 47(2) of the CGST/TNGST Act, 2017, is sustainable. The Court reasoned that the liability to pay tax arises upon supply and invoice raising, irrespective of consideration receipt. Failure to file returns attracts late fees, and this failure was wholly within the petitioner's control. The Court referenced its prior decision in M/s. Kandan Hardware Mart and others Vs. The Assistant Commissioner (ST) (FAC), Park Town Assessment Circle, Chennai and others, which held that late fee and penalty cannot be imposed together as the late fee is considered penal in nature. However, in this specific writ petition, the challenge was only to the late fee and penalty, and the Court found no merit in challenging the late fee. The Court dismissed the writ petition to the extent of the challenge to the imposition of late fee. The judgment does not provide specific findings on the penalty under Section 125, as the dismissal was limited to the late fee challenge.

Key Issues

1. Whether the imposition of late fee under Section 47(2) of the CGST/TNGST Act, 2017, is sustainable when the petitioner's previous writ petitions concerning the recipient's liability for statutory dues were disposed of by this Court on 26.03.2025, with directions for payment and reimbursement? Petitioner's contention: The petitioner argues that the impugned proceedings imposing late fee and penalty are unsustainable in light of the previous court order directing the recipient (BSNL) to pay statutory dues, implying that the liability should have been discharged by BSNL. The petitioner relies on the previous order dated 26.03.2025 in W.P.Nos. 10979 & 10982 of 2025. Revenue's contention: The judgment does not explicitly record arguments from the revenue or state's side regarding this specific issue. However, the court's reasoning implies that the failure to file returns was within the petitioner's control.