In two identical rulings, the Court set aside penalty orders of Rs. 50,000 each, noting that the amount exceeded the maximum limit prescribed under the UPGST Act.
The Allahabad High Court has quashed penalty orders imposed under Section 125 of the CGST/UPGST Act in two separate cases, holding that the penalty of Rs. 50,000 (Rs. 25,000 under CGST and Rs. 25,000 under UPGST) exceeded the maximum limit provided under the U.P. Goods and Services Tax Act [M/s Compendious Med Works Pvt. Ltd. v. Commissioner, Commercial Tax; M/s Omega Slayers Pvt. Ltd. v. Commissioner, Commercial Tax].
In both cases, the bench of Justices Shekhar B. Saraf and Amitabh Kumar Rai noted that the petitioners had already filed their returns and paid the applicable late fees. The penalties had been imposed for delayed or non-filing of GSTR-3B — a return-filing default that is specifically governed by statutory provisions relating to filing of returns and late fees.
The petitioners in both cases had contended that subjecting a return-filing default — which is already covered by specific provisions for late fees — to the residuary penalty under Section 125 was arbitrary and disproportionate. The Court quashed both the show-cause notices and the penalty orders.
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