Supreme Court Upholds Penalty for Non-Filing of GST Returns and Non-Payment
The Supreme Court has dismissed a Special Leave Petition (SLP) filed by a construction company, affirming the Andhra High Court's decision to impose penalties for non-filing and non-payment of Goods and Services Tax (GST) returns. The ruling underscores the importance of timely compliance with GST regulations.
GstSupreme CourtAndhra High CourtNonfilingPenaltyReal EstateMay 23, 2025
The Andhra High Court had previously ruled that the failure to file monthly returns and remit taxes, despite receiving payments, amounted to wilful suppression. The court confirmed the imposition of penalty under Section 74(1) and associated penalties under Sections 122 and 125 of the CGST Act, rejecting the petitioner’s claim of bona fide default.
Justice J.B. Pardiwala and Justice R. Mahadevan of the Supreme Court ruled, “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.”
Sriba Nirman Company, 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. The firm raised nine invoices totaling over ₹20.92 crores, including GST of ₹3.19 crores, all billed in March 2018. 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.
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.
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.
This ruling serves as a crucial reminder for businesses to ensure timely and accurate filing of GST returns and payment of dues to avoid penalties and legal repercussions. The stringent measures taken by the courts aim to maintain the integrity of the tax system and ensure fair compliance with the law.
Frequently Asked Questions
What is the significance of the Supreme Court's ruling in the Sriba Nirman Company case?
The ruling emphasizes the importance of timely compliance with GST regulations. It confirmed the penalties for non-filing and non-payment of GST returns, underscoring the legal consequences of wilful suppression.
What penalties were imposed on Sriba Nirman Company?
Sriba Nirman Company was penalized under Section 74(1) and associated penalties under Sections 122 and 125 of the CGST Act for non-filing and non-payment of GST returns.
What was the reason given by Sriba Nirman Company for not filing GST returns?
The company cited inadequate funds and the GST portal’s restriction against filing returns without accompanying tax payment as the reasons for their failure to file.
How did the Andhra High Court justify the penalties imposed on the company?
The Andhra High Court held that the company’s failure to file monthly returns and remit taxes, despite receiving payments, amounted to wilful suppression, justifying the imposition of penalties.
What is the main takeaway for businesses from this ruling?
The main takeaway is the importance of timely and accurate filing of GST returns and payment of dues to avoid penalties and legal repercussions. This ruling serves as a reminder for businesses to ensure compliance with GST regulations.
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