LEVY OF LATE FEE UNDER ‘GST’

[Mr. M. GOVINDARAJAN]

Late fee

Section 47 of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides for the levy of late fee in case of belated filing of returns that are required to be filed under the Act.  Section 47(1) provides that any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38 or returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.

Section 47(2) provides that any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent of his turnover in the State or Union territory.

Return under section 37

Section 37(1) provides that every registered person, other than an Input Service Distributor, a non-resident taxable person and a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, in Form – GSTR -1, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within such time and in such manner as may be prescribed.

Return under section 38

Section 38 (2) provides that  every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, the details of inward supplies of taxable goods or services or both, including inward supplies of goods or services or both on which the tax is payable on reverse charge basis under this Act and inward supplies of goods or services or both taxable under the Integrated Goods and Services Tax Act or on which integrated goods and services tax is payable under section 3 of the Customs Tariff Act, 1975 (51 of 1975) , and credit or debit notes received in respect of such supplies during a tax period after the tenth day but on or before the fifteenth day of the month succeeding the tax period in Form GSTR – 2.

Return – Form GSTR – 3B

Rule 61(5) provides for filing form GSTR – 3B every month since  the time limit for furnishing of details in Form GSTR-1 under section 37 and in Form GSTR-2 under section 38 has been extended within 20^th of the following month.            

Return under section 39

Section 39 provides that the following registered person shall file returns in the required form periodically within the due dates as mentioned below-

Quarterly return

• The service providers who opted to pay tax under composition scheme is to file return every quarter in Form GSTR – 9A within 18 days from the end of the quarter.

Monthly return

• Every person required to deduct tax under section 51 is to file monthly return in Form GSTR -  7 within 10 days from the end of the month.
• Every Input Service Distributor is to file monthly return in Form GSTR – 6 within 13 days from the end of the month.
• Nonresident taxable person shall, for every calendar month or part thereof, furnish, in Form GSTR - 5, a return, electronically, within twenty days after the end of a calendar month or within seven days after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier.
• Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax shall, for every calendar month or part thereof, furnish, in Form GSTR 3, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed on or before 20^th of the following month.

Final Return under section 45

Section 45 provides that every registered person who is required to furnish a return under section 39(1) and whose registration has been cancelled shall furnish a final return within three months of the date of cancellation or date of order of cancellation, whichever is later, in Form GSTR – 10.

Annual Return under section 44

Section 44(1) provides that every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in Form GSTR - 9 on or before the thirty-first day of December following the end of such financial year.

Section 44(2) provides that every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

The proviso to Rule 80(1) provides that a person paying tax under section 10 shall furnish the annual return in FORM GSTR-9A.

Waiver of late fee

Section 128 of the Act gives powers to the Central Government to waive the late fee either in full or partly for such class of taxpayers and under such mitigating circumstances as may be specified therein on the recommendations of the Council.     The waival may be subject to conditions imposed by the Central Government.

Full waiver

The Central Government issued three notifications for complete waival of late fee.  In each notification the Central Government gave the details of the month(s) for which waival is granted.

               Vide Notification No.28 /2017 – Central Tax, dated 01st September, 2017, the Central Government, on the recommendations of the Council, waived the late fee payable, for all registered persons who failed to furnish the return in FORM GSTR-3B for the month of July, 2017 by the due date.

Vide Notification No. 50/2017 – Central Tax, dated 24th October, 2017, the Central Government, on the recommendations of the Council, waived the late fee payable for all registered persons who failed to furnish the return in FORM GSTR-3B for the months of August and September, 2017 by the due date. 

Vide Notification No. 22 /2018 – Central Tax, dated 14.05.2018, the Central Government, on the recommendations of the Council, waived the late fee payable  for failure to furnish the return in FORM GSTR-3B by the due date for each of the months from October, 2017 to April, 2018, for the class of registered persons whose declaration in FORM GST TRAN-1 was submitted but not filed on the common portal on or before the 27th day of December, 2017.  Such registered persons have filed the declaration in FORM GST TRAN-1 on or before the 10th day of May, 2018 and the return in FORM GSTR-3B for each of such months, on or before the 31st day of May, 2018.

Part waiver

Vide Notification No. 64/2017 – Central Tax, dated 15th November, 2017, the Central Government, on the recommendations of the Council, waived the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR3B for the month of October, 2017 onwards by the due date, which is in excess of an amount of twenty five rupees for every day during which such failure continues. Where the total amount of central tax payable in the said return is nil, the amount of late fee payable by such registered person for failure to furnish the said return for the month of October, 2017 onwards by the due date under section 47 of the said Act shall stand waived to the extent which is in excess of an amount of ten rupees for every day during which such failure continues.

Vide Notification No. 73/2017 – Central Tax, dated 29th December, 2017, the Central Government, on the recommendations of the Council, waived the amount of late fee payable, by any registered person for failure to furnish the return in FORM GSTR-4 by the due date, which is in excess of an amount of twenty five rupees for every day during which such failure continues. Where the total amount payable in lieu of central tax in the said return is nil, the amount of late fee payable, by any registered person for failure to furnish the said return by the due date shall stand waived to the extent which is in excess of an amount of ten rupees for every day during which such failure continues. 

Vide Notification No. 4/2018 – Central Tax 23rd January, 2018, the Central Government, on the recommendations of the Council, waived the amount of late fee payable by any registered person for failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by the due date, which is in excess of an amount of twenty-five rupees for every day during which such failure continues.  Where there are no outward supplies in any month/quarter, the amount of late fee payable by such registered person for failure to furnish the said details by the due date shall stand waived to the extent which is in excess of an amount of ten rupees for every day during which such failure continues.

Vide Notification No. 5/2018 – Central Tax, dated 23.01.2018, the Central Government, on the recommendations of the Council, waived the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR 5 by the due date, which is in excess of an amount of twenty five rupees for every day during which such failure continues.  Where the total amount of central tax payable in the said return is nil, the amount of late fee payable by such registered person for failure to furnish the said return by the due date shall stand waived to the extent which is in excess of an amount of ten rupees for every day during which such failure continues.

Vide Notification No. 6/2018 – Central Tax, dated 23rd January, 2018, the Central Government, on the recommendations of the Council, waived the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR 5A by the due date which is in excess of an amount of twenty-five rupees for every day during which such failure continues. Where the total amount of integrated tax payable in the said return is nil, the amount of late fee payable by such registered person for failure to furnish the said return by the due date shall stand waived to the extent which is in excess of an amount of ten rupees for every day during which such failure continues.

Vide Notification No. 7/2018 – Central Tax, dated 23.01.2018, the Central Government, on the recommendations of the Council, waived the amount of late fee payable by any registered person for failure to furnish the return in FORM GSTR 6 by the due date which is in excess of an amount of twenty five rupees for every day during which such failure continues.

Constitutional validity of section 47

The constitutional validity of section 47 has been challenged in ‘Raj SANJAYBHAI Tanna  v.  Union of India’ - 2018 (9) TMI 610 – Gujarat High Court, the constitutional validity of section 47 has been challenged by the writ petitioners.  Their main contention is that the Government is trying to recover penalty in the guise of late fee charges.   As a result, the dealers losing their valuable right of appeals as well as right to point out that there was sufficient cause preventing them from filing the return within the due date. In all previous laws which have been repealed by the statutes enacted under the new GST regime, such charges were categorized as penal in nature. Various practical difficulties in filing the returns including such as malfunctioning of the official portal which often times, prevent uploading of the returns were cited. 

The High Court held that this is not a case where the petitioners are espousing the cause of a weaker section of the society who, on account of hardships and handicaps inherently faced by them, is unable to knock the door of justice. The public interest jurisdiction of the High Court and the Supreme Court, over a period of time, has been considerably expanded to take within its sweep range of issues not confined to the assertion of rights of weaker sections of the society or the marginalized groups. The petitioners who are themselves active tax consultants and tax practitioners indirectly concerned with the same.   There is no reason why such an issue should be examined in a public interest petition when, as noted above, the group of persons whom the statute affects does not suffer from any handicap preventing them from taking up the litigation themselves and pursuing it.  The High Court dismissed the writ petition.