Facts of the Case

Tvl. Sri Annai Agro Foods (GSTIN 33AEKFS5589J1ZC) was assessed vide order dated 28.05.2025 and a summary order (Form GST DRC-07) dated 29.05.2025, imposing a general penalty of Rs.50,000 (split between CGST and SGST) and a late fee for delayed filing of its annual return for FY 2021-22, along with an attachment on its bank account. The petitioner challenged both the penalty and the late fee computation before the Madurai Bench of the Madras High Court.

Issues Involved

  1. Whether a general penalty of Rs.50,000 towards CGST and SGST for delayed filing of the annual return is legally sustainable, in light of an earlier coordinate ruling.
  2. Whether late fee charged at 0.75% of annual turnover, when Section 47(2) caps it at 0.25%, is valid.
  3. Whether the consequent bank attachment can survive once the underlying orders are set aside.

Petitioner's Arguments

  • The identical issue of a Rs.50,000 general penalty for CGST/SGST had already been held incorrect and set aside by the same Court in W.P.No.36614 of 2024, dated 04.02.2025, and should govern the present case as well.
  • Section 47(2) of the GST Act caps late fee at Rs.100 per day subject to a maximum of 0.25% of annual turnover, but the respondent, in total non-application of mind, had collected late fee amounting to 0.75% of turnover — three times the statutory ceiling.

Respondent's Arguments

  • The Additional Government Pleader fairly conceded to both submissions made by the petitioner.

Court Order / Findings

  • Following its own precedent in W.P.No.36614 of 2024 on the general-penalty issue, and accepting the respondent's concession on both points, the Court quashed the impugned assessment order and summary order to the extent they imposed the general penalty of Rs.50,000.
  • Separately set aside the late-fee levy and remanded that limited aspect to the respondent for fresh consideration in conformity with Section 47(2).
  • Since the impugned order itself stood set aside, the Court held the attachment on the petitioner's bank account could not survive, directing the respondent to instruct the bank to release the attachment and de-freeze the account immediately upon production of a copy of the order.

Important Clarification

  • A flat Rs.50,000 general penalty for CGST/SGST on late filing of an annual return, without a specific statutory basis, is being consistently set aside by the Madras High Court following its ruling in W.P.No.36614 of 2024.
  • Late fee under Section 47(2) is strictly capped at 0.25% of annual turnover (Rs.100/day maximum), so any levy computed on a higher percentage is contrary to law and must be redetermined; once the assessment order underlying a bank attachment is set aside even in part, the attachment cannot survive and must be lifted immediately.

Sections Involved

  • Section 47(2), CGST Act, 2017 — caps late fee for delayed filing of the annual return at Rs.100 per day, subject to a maximum of 0.25% of the taxpayer's turnover in the relevant State/UT.
  • Section 122/125, CGST Act, 2017 — general penalty provisions, relevant to the Rs.50,000 penalty held unsustainable.
  • Section 79, CGST Act, 2017 — modes of recovery, relevant to the bank attachment ordered lifted.

Decision – In Favour of

The decision is in favour of the assessee. The general penalty was quashed outright, the late fee levy was set aside and remanded for recomputation within the statutory cap, and the bank attachment was ordered released.

Case Details

Court: Madurai Bench of Madras High Court
Case No.: W.P.(MD) No.36016 of 2025 and W.M.P.(MD) Nos.28621 & 28623 of 2025
Coram: Hon'ble Mr. Justice Krishnan Ramasamy
Date of Order: 17.12.2025

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