Site Title

By Sidheswar Jena, PhD Scholar (Law)

Introduction

The Goods and Services Tax (GST) regime was designed to simplify taxation, but its penalty provisions have sometimes been applied in ways that burden honest taxpayers. A recurring controversy is whether the general penalty under Section 125 of the CGST Act can be imposed in addition to the late fee under Section 47 for delayed return filing. Several recent judicial pronouncements — notably from the Madras High Court — make it clear that such double penalisation is legally unsustainable.

—

Statutory Scheme: Section 47 vs. Section 125

Section 47 (Late Fee): imposes a fixed late fee for failure to furnish returns within time. It is a specific sanction tailored for delay.

Section 125 (General Penalty): provides a residuary penalty of up to ₹25,000, but only “where no penalty is separately provided for such contravention.”

The legislative intent is clear: if a contravention already attracts a specific fee or penalty under the Act, Section 125 cannot be invoked to duplicate punishment.

—

Case Law: Madras High Court’s Clarification

In Tvl. Jainsons Castors & Industrial Products v. Superintendent of GST (2025), the Madras High Court quashed a Section 125 penalty levied in addition to the late fee under Section 47. The Court held:

1. Section 125 is residuary and cannot be mechanically applied where a specific penal provision exists.

2. Imposing both late fee and general penalty amounts to double jeopardy in taxation, which is impermissible.

3. Absence of fraudulent intent or evasion makes the imposition of an additional penalty disproportionate.

The Court’s ruling aligns with earlier practitioner commentary and guidance notes that emphasise the limited role of Section 125.

—

Principle of Proportionality and Harassment Concerns

Penalties are punitive, not compensatory. The doctrine of proportionality requires that sanctions correspond to the nature of the offence. When a taxpayer has already discharged the statutory late fee, layering an additional penalty is excessive and amounts to harassment.

Courts have consistently discouraged such administrative overreach, underscoring that tax compliance thrives on fairness and predictability — not fear.

—

Practical Implications for Taxpayers

If confronted with a Section 125 penalty for late filing:

Primary Defence: Section 47 already prescribes the sanction; Section 125 is inapplicable.

Secondary Defence: No intent to evade, taxes duly paid, delay was procedural.

Procedural Defence: Challenge lack of proper show-cause notice or hearing.

Relief can be sought through writ petitions, appeals, or representation to higher authorities citing the Madras HC decision.

—

Conclusion

The GST framework recognises that not all contraventions merit the same degree of punishment. Section 47 provides a specific and sufficient consequence for late filing — the late fee. Extending Section 125 to such cases is contrary to legislative intent, violates principles of fairness, and amounts to taxpayer harassment. Judicial guidance now reaffirms that officers must exercise discretion lawfully and avoid the temptation to “double punish.

The message is simple: no double penalty where the law already speaks once.