One real scenario: ₹1 lakh tax, 30 days late, normal return
A business with ₹1,00,000 in GST due, filing its GSTR-3B 30 days after the deadline with a normal (non-nil) return, faces both penalties at once from the same 30-day delay.
Interest on the tax itself: ₹1,479.45
At the standard 18% per annum rate, 30 days of delay on ₹1,00,000 accrues ₹1,479.45 in interest under Section 50 of the CGST Act — this is compensation for the tax department not having the money on time.
Late fee for the return itself: ₹1,500
Separately, under Section 47, the same 30-day delay on a normal return attracts a flat ₹1,500 late fee (₹50/day × 30 days) — this is a penalty for filing the return late, independent of whether tax was actually owed.
The real total extra cost: ₹2,979.45
Adding the two real, separately-calculated amounts together — ₹1,479.45 interest plus ₹1,500 late fee — gives ₹2,979.45 in total extra cost, on top of the ₹1,00,000 tax itself, for a grand total payable of ₹1,02,979.45.
Why these are two separate penalties, not one
Interest and late fee are levied under different sections of the CGST Act for different reasons — interest compensates for late payment of tax, while the late fee penalizes late filing of the return. A nil return with no tax due would owe the smaller late fee but no interest at all, since there'd be no tax amount to accrue interest on.