Supreme Court Confirms Penalty on Non-Filing of GST Returns and Payment [Read Judgement]

The Supreme Court dismissed the SLP filed by a construction company confirming the ruling of Andhra High Court upholding the penalty imposed for non-filing and non-payment of Goods and Services Tax Returns ( GSTR ). It confirmed the Andhra Pradesh High Court’s ruling confirming the penalty imposed by the department.

Justice J.B. Pardiwala and Justice R. Mahadevan ruled that “Having heard the learned Senior counsel appearing for the petitioner and having gone through the materials on record, we see no good reason to interfere with the impugned order passed by the High Court of Andhra Pradesh at Amaravati. The Special Leave Petition is, accordingly, dismissed.”

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The Petitioner in the case is a partnership construction firm named Sriba Nirman Company. The petitioner firm, established in January 2017, had executed works as a sub-contractor for M/s. Vijay Nirman Company Ltd. during the period from July 2017 to March 2018 and raised nine invoices totaling over ₹20.92 crores, including GST of ₹3.19 crores, all billed in March 2018.

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Despite receiving partial payments from its client, the petitioner failed to discharge its GST liability or file GSTR-3B returns for the said period, citing inadequate funds. The firm's failure to file returns was attributed to the GST portal’s restriction against filing without accompanying tax payment. A subsequent inspection by the Directorate General of GST Intelligence (DGGI) on 31.07.2018 prompted the petitioner to realize its lapse, following which it paid ₹3.36 crores towards tax dues and filed all pending returns by 29.09.2018.

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The GST department issued show cause notices in August and September 2020, demanding tax (already paid), interest, and penalty under various provisions, including Section 74(1), Section 122, and Section 125 of the CGST Act.

Despite submitting a detailed reply and availing a personal hearing, the adjudicating authority passed an order on 24.12.2021 confirming the demands, which was later upheld by the appellate authority. A recovery notice dated 19.08.2023 followed, demanding payment of ₹3.20 crores, submitted by the petitioner.

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The Andhra High Court held that the failure to file monthly returns and remit taxes, despite receiving payments, amounted to wilful suppression. It confirmed the imposition of penalty under Section 74(1) and associated penalties under Sections 122 and 125, rejecting the petitioner’s claim of bona fide default.

The apex court found nothing to interfere with the Andhra High Court, thus upheld its ruling and confirmed the penalty for non-filing of GST returns and its Non-payment.

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To Read the full text of the Judgement CLICK HERE

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