GST Tribunal Imposes ₹10,000 Penalty After Taxpayer Files Returns And Pays Tax But Leaves Interest And Late Fee Unpaid

The Department appealed under Section 112 of the CGST Act against the First Appellate Authority’s order allowing the taxpayer’s appeal and revoking cancellation of its GST registration.

The registration had been cancelled after the taxpayer failed to file GSTR-3B returns for six consecutive months.

The FAA had directed verification of the taxpayer’s filing of returns and payment of tax; the Department contended that interest, late fee and penalty under Rule 23(1) had also to be paid.

The taxpayer did not appear before the Tribunal despite multiple hearing opportunities.

Rule 23(1) of the CGST Rules provides that, where registration was cancelled for failure to furnish returns, an application for revocation cannot be made unless the outstanding returns are furnished and tax due is paid together with applicable interest, penalty and late fee; it also prescribes the filing of subsequent returns after revocation.

The Tribunal referred to Sections 50 and 47 of the Act as providing for interest and late fee, respectively, and to Section 79 as the statutory recovery mechanism for admitted dues.

It also treated penalty as payable under Rule 23, although the judgment does not identify a separate penalty provision.

The Tribunal considered that the FAA had focused on verification of return filing and tax payment without expressly addressing the additional amounts contemplated by Rule 23(1).

It held that the taxpayer had paid tax and filed returns but had not paid the applicable interest and late fee.

The Tribunal observed that those amounts could be recovered under Sections 50 and 47, and stated that the taxpayer was additionally liable to a penalty.

Although it discussed Section 79 as the mechanism for recovering admitted dues, it ultimately modified the FAA’s order and imposed a penalty.

The appeal was disposed of without an order as to costs.