Hon’ble Madras High Court (‘HC’) in the case of M/s K.I. International (India) Limited (petitioner) has ruled that the petitioner is not eligible for the benefit of payment of taxes in instalments as per Section 80 of GST Act in view of non-payment of due taxes as per the returns filed. Captioned ruling has been analyzed in this update.
A. FACTS OF THE CASE (relevant extracts)
- The petitioner is a company incorporated under the Companies Act 2013.
- The petitioner has admittedly not filed GSTR-3B for the period September 2018 to March, 2019 and not deposited GST, though the return of outward supplies i.e. GSTR-1 was duly filed.
- The petitioner requested payment of taxes with interest in 24 instalments as provided for in Section 80 of GST Act which was rejected by Commissioner and petitioner approached HC under writ jurisdiction.
B. CONTENTION OF THE APPLICANT
- That the object of Section 80 is to benefit an assessee who approaches the Commissioner for a scheme of instalments. The sole exception to the application of Section 80 is in respect of admitted tax in any return.
- That Form GSTR 1 does not comprise a return and thus the exclusion that is set out under Section 80 would not apply to it.
- That the impugned order under Section 80 has been passed even prior to the assessment having framed under Section 73 and thus is invalid.
C. CONTENTION OF THE DEPARTMENT
- Section 2 (37) defines ‘a return’, to mean ‘any return prescribed or otherwise required to be furnished by or under this Act or the Rules made thereunder’.
- That the return of outward supplies is in form GSTR 1 and is the return that has been filed by the petitioner wherein the taxable supplies made has been stated.
- That Section 80 makes no reference to an assessment and only talks about self-assessed liability in any return. Thus, completion of assessment U/s 73 is not a condition to make the tax self-assessed.
D. OBSERVATION AND DECISION BY HC
- HC observed that accepting the argument of the petitioner would tantamount to a situation wherein a delinquent assessee, one who has omitted to file a return of monthly turnover but has filed the prescribed return reflecting taxable sales, is allowed the benefit under Section 80, of an instalment scheme. The object of Section 80 is only to benefit an assessee who has been complaint in effecting payment of the admitted tax.
- In this case, while the petitioner has filed returns it has not paid the tax and hence it is barred from obtaining benefit under Section 80 and thus the writ petition is dismissed.
E. Relevant legal provisions
Section 80 -Payment of tax and other amount in installment
“On an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly installments not exceeding twenty four, subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed:
Provided that where there is default in payment of any one installments on its due date, the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.”
F. Our comments
In the captioned decision, Hon’ble Rajasthan High Court has held that GSTR-1 “return of outward supplies” under section 37 of GST Act and thus GST liability based on such form shall be deemed as self-assessed. Since section 80 does not provide benefit of instalments to such self-assessed tax, HC has dismissed the writ and sustained the Commissioner’s order. Hon’ble Court also relied on Hon’ble Orissa High Court’s ruling in the case of M/s. P. K. Ores Pvt Ltd @ M/s.PK Minings Pvt Ltd v Commissioner of Sales Tax wherein the payment of interest on self-assessed tax was held to be not eligible for facility of payment by instalment.
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(Author can be reached at dinesh.singhal@snr.company or cadineshsinghal@gmail.com).
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