The Allahabad High Court addressed a case involving M/s Omega Slayers Private Limited, which faced a penalty for filing a delayed GSTR-3B return. The company filed its return late for February 2025 but paid the late fee and settled its tax liability of ₹50,688 through input tax credit. Despite this, the Assistant Commissioner, State Tax, imposed a penalty of ₹50,000 under Section 125, divided equally between CGST and SGST, and issued a consequential Form GST DRC-07.
Read more: Delhi High Court - An Advocate cannot claim client privilege as an absolute bar to a GST investigation where there is prima facie material suggesting his own involvement in the affairs under investigation [Order attached]
The company challenged this penalty through a writ under Article 226, seeking to have the penalty order and the recovery notice quashed. The key issue was whether the penalty was sustainable given the compliance, albeit delayed, with the filing and payment requirements.
The Court found that the penalty exceeded the statutory maximum limit under the U.P. GST Act, 2017, as the company had already complied with the filing and payment requirements before the case reached the High Court. Consequently, the penalty order dated 30.04.2025 was quashed. The Court set aside the show cause notice and the penalty order, and the writ petition was disposed of, invalidating the consequential DRC-07 recovery notice as well.
Order Date - 28 October 2026
Parties: M/s Omega Slayers Private Limited, through Authorised Signatory Mr. Dev Gupta Vs Commissioner, Commercial Tax (State Tax), Govt. of U.P., Vanijya Kar Bhawan, Lucknow, and Another
Facts -
- Omega Slayers Private Limited (Petitioner) did not file its GSTR-3B for February 2025 on time.
- It later filed the return, paid the late fee, and discharged the entire tax liability of ₹50,688 through available input tax credit.
- The Assistant Commissioner, State Tax, Lucknow Sector-14, still imposed a penalty under Section 125 on 30.04.2025: ₹25,000 under CGST and ₹25,000 under SGST, totalling ₹50,000. A consequential Form GST DRC-07 was also issued.
- Aggrieved, the Petitioner filed a writ under Article 226 to quash the penalty order and DRC-07, and to restrain recovery.
Issue. -
- Whether a ₹50,000 maximum general penalty under Section 125 is sustainable when the return was filed, late fee paid, and tax discharged through ITC.
Order -
- The Court noted that the Petitioner had already filed its return and paid the late fee in accordance with law. Compliance, even if delayed, had been completed before the matter reached the High Court.
- The Court held that the penalty order of 30.04.2025, at ₹50,000, exceeded the maximum limit provided under the U.P. GST Act, 2017. The penalty was therefore beyond what the statute permits.
- On this basis, the Court quashed and set aside both the impugned show cause notice and the penalty order.
- The writ petition was disposed of on these terms, and the consequential DRC-07 recovery falls with the penalty order.
