Madras High Court Holds Late Fee Under Section 47 GST Act Applies to Delay in Filing GSTR-9C Reconciliation Statement

Background and Issue
The case before the Madras High Court concerned whether a late fee under Section 47 of the Central/Tamil Nadu Goods and Services Tax Act, 2017 (GST Act) can be levied for the delayed filing of the reconciliation statement in Form GSTR-9C. The petitioner challenged an assessment order imposing a late fee for belated filing of Form GSTR-9C, arguing that the late fee should only apply to delays in filing the annual return in Form GSTR-9, for which the petitioner had already paid the applicable fee.

Arguments and Statutory Framework
The petitioner contended that Section 47 of the GST Act only provides for a late fee for delays in filing the annual return, not the reconciliation statement, and that the requirement to file GSTR-9C arises from Rule 80(3) of the GST Rules, not directly from Section 44. The respondent, however, argued that amendments to Section 44 and Rule 80(3) make the filing of GSTR-9C mandatory for taxpayers with turnover exceeding Rs. 5 crores, and that Section 47(2) imposes a late fee for failure to furnish returns required under Section 44.

The Court examined the evolution of Section 44, noting amendments in 2021 and 2023 that clarified the requirement for an annual return, which may include a self-certified reconciliation statement. Rule 80(3) specifically mandates that eligible taxpayers “shall also furnish a self-certified reconciliation statement as specified under section 44 in FORM GSTR-9C along with the annual return.” Section 2(97) defines “return” to include any return required under the Act or Rules.

Court’s Reasoning
The Court emphasized that the statutory language, particularly the use of “may include” in Section 44 and the mandatory “shall also furnish” in Rule 80(3), means that for taxpayers above the turnover threshold, the reconciliation statement is an integral part of the annual return. The Court relied on Supreme Court precedent to interpret the word “includes” as generally expanding the scope of the provision unless context dictates otherwise.

The Court further noted that the late fee under Section 47(2) is penal in nature and applies to failure to furnish returns as required under Section 44. Since Section 44, read with Rule 80(3), requires the reconciliation statement to be filed along with the annual return, non-filing or delayed filing of GSTR-9C constitutes non-filing of the return under Section 44, thereby attracting the late fee.

The Court also addressed the petitioner’s reliance on a Kerala High Court decision, distinguishing it on the basis that the detailed statutory scheme and the interplay between Section 44, Rule 80(3), and Section 47 were not fully considered in that case.

Decision and Outcome
Concluding that the statutory framework mandates the filing of GSTR-9C as part of the annual return for eligible taxpayers, the Court held that a late fee under Section 47 is applicable for delays in filing the reconciliation statement. The writ petition was dismissed, with liberty granted to the petitioner to pursue an appeal on factual aspects before the appropriate authority.

This decision clarifies the legal position that, for taxpayers required to file GSTR-9C, the late fee under Section 47 applies to delays in filing the reconciliation statement, as it is considered part of the annual return under Section 44 of the GST Act.