Important High Court Judgment – Relief from General Penalty on Belated GSTR-9 Filing & Extension of Amnesty Scheme Benefits

06Jan 2026 by admin

Important High Court Judgment – Relief from General Penalty on Belated GSTR-9 Filing & Extension of Amnesty Scheme Benefits

  • Case Name: Kandan Hardware Mart vs. The Assistant Commissioner (ST) (FAC) [TS-01-HC(MAD)-2026-GST]
  • Court: Madras High Court

Key Issue

The Department had been levying a “General Penalty” under Section 125 of the GST Act (up to Rs. 25,000) in addition to the “Late Fee” under Section 47 for the delayed filing of Annual Returns (GSTR-9). The core questions were:

  1. Can a General Penalty be imposed when a Late Fee is already being charged?
  2. Are taxpayers who filed their belated returns before the Amnesty Scheme (Notification No. 7/2023-CT) eligible for the reduced late fee benefits?

Judgment Highlights

1. “Late Fee” is effectively a Penalty; No Double Jeopardy

The High Court ruled that the “Late Fee” levied under Section 47 acts as a penalty because it arises only upon default, operates as a deterrent, and lacks a quid pro quo (service in return)3.

  • Ruling: Since the Late Fee effectively partakes the character of a penalty, the Department cannot impose a separate “General Penalty” under Section 125 for the same contravention4.
  • Impact: Clients who have received notices proposing a General Penalty (u/s 125) for non-filing or late filing of GSTR-9 can rely on this judgment to contest such levies.

2. Amnesty Scheme Benefits Extended to Early Filers

The Government had issued an Amnesty Scheme (Notification No. 7/2023-CT) capping the late fee at Rs. 20,000 (Rs. 10,000 CGST + Rs. 10,000 SGST) for returns filed between April 1, 2023, and August 31, 2023. Taxpayers who had filed their returns before April 1, 2023, were initially denied this benefit and charged higher late fees.

  • Ruling: The Court held that denying the benefit to those who filed earlier (and were thus more compliant) than those who waited for the amnesty is discriminatory and violates Article 14 of the Constitution5.
  • Impact: The benefit of the reduced late fee (capped amount) is now extended to taxpayers who filed their overdue GSTR-9 returns before April 1, 20236. These taxpayers are not liable for late fees in excess of the amnesty cap, nor are they liable for the General Penalty.

Summary of Relief Granted

ScenarioTaxpayer StatusRelief Granted by HC
1Filed GSTR-9 within Amnesty Window (01.04.23 – 31.08.23)Confirmed: Entitled to Late Fee Waiver; No General Penalty can be levied. 7
2Filed GSTR-9 before Amnesty Window (Before 01.04.23)Relief Granted: Entitled to Amnesty benefits (refund/re-computation of excess late fee); No General Penalty applicable. 8
3Filed GSTR-9 after Amnesty Cut-off (After 31.08.23)No waiver of Late Fee available. (Note: The rationale that “Late Fee is Penalty” may still be argued to contest a separate General Penalty, though waiver is not applicable). 9