One of the biggest demand from the trade along with the facility to file quarterly returns and facility to revise returns, is to restrict the amount of late fees. GST Council in its 23rd meeting held on 10th Nov, 2017 decided to restrict the maximum amount of late fee payable to the extent of output tax liability in a return by exercising powers under section 128 of the CGST Act, 2017. However for some reasons, the decision never got implemented.
The relevant minutes of the meeting are as follows :
Agenda item 7(vi) : To restrict the maximum amount of late fee payable to the extent of output tax liability in a return by exercising powers under Section 128 of the CGST Act, 2017
53. Introducing this agenda item, the Secretary stated that representations had been received that in some cases, late fee payable for delayed filing of Return exceeded the principal amount of tax and interest by a very large amount and this was deterring the small and medium business from filing Returns. He stated that the Law Committee had recommended that the maximum amount of late fee payable by a taxpayer could be restricted
to the amount of tax payable in a return in case such amount was less than 5,000 rupees by exercising the powers conferred under Section 128 of the CGST Act. He further stated that
during the officers’ meeting held on 9 November, 2017, it was also decided that the late fee for taxpayers who filed Nil returns should be only Rs. 20 per day (Rs. 10 CGST and Rs. 10 SGST). He suggested that the Council could approve these proposals. The Council approved these proposals.
54. For Agenda item 7(vi), Council approved the following :
(i.) The maximum amount of late fee payable by a taxpayer shall be restricted to the amount of tax payable in a return in case such amount is less than 5,000 rupees;
(ii.) The late fee for taxpayers who filed Nil returns shall be Rs. 20 per day (Rs. 10 CGST and Rs. 10 SGST).
It would be interesting if the reason comes in public domain that why the decision of GST Council never got implemented even though the trade has suffered on account of such lack of implementation and people with nill turnover or minimal turnover have been made to pay heavy late fees.
Source : https://twitter.com/haldiaarpit/status/1237577487900479491?s=19