Payment of interest liability in installments is allowed due to pandemic situation

Aich Brothers Vs Union of India (Gauhati High Court)

The Hon’ble Gauhati High Court in the case of M/s. Aich Brothers v. the Union of India [WP(C)/3222/2021, dated July 13, 2021] directed the assessee to approach the Revenue Department with an application to pay the outstanding dues against the interest liability for delayed filing of returns in Form GSTR-3B, in instalments as a special case considering Covid-19 pandemic situation.

Facts:

This petition has been filed by M/s. Aich Brothers (“the Petitioner”), being aggrieved of cancellation of Goods and Services Act (“GST”) registration of the Petitioner’s firm by the Revenue Department (“the Respondent”) for alleged non-payment of the outstanding amount of around INR 73 lakhs against the interest liability for delayed filing of returns Form GSTR-3B for the period from October 2018 to April, 2020, causing immense difficulties in releasing the payment due to the Petitioner against various contractual works in different organizations.

The Petitioner has contended that the outstanding amount shown on the portal was duly paid and even after the payment by the Petitioner, the registration was not restored. Further, appropriate direction has been sought by the Petitioner to accept the interest liability in instalment due to financial crisis faced during pandemic situation.

Issue:

• Whether the Petitioner is entitled to pay the arrear amount of interest in instalment?

Held:

The Hon’ble High Court of Gauhati in WP(C)/3222/2021, dated July 13, 2021 held as under:

• Observed that, due to non-payment of the interest liability, the Petitioner is required to make the payment and only thereafter, the registration of the Petitioner shall be restored by the Respondent.
• Noted that, due to striking out of the registration of the Petitioner’s firm, the Petitioner could not collect the contractual dues from the various organizations against the contractual job and the stated that the same cannot be disbelieved.
• Directed the Petitioner to approach the Respondent along with an application to permit the Petitioner to pay the interest liability in instalment as a special case keeping in view the pandemic situation arising out of Covid-19.
• Directed the Respondent, to immediately restore the GST registration of the Petitioner, once all the dues are cleared as per the direction of the Respondent.

Our Comments:

Earlier, the Hon’ble Kerala High Court in the matter of Pazhayidom Food Ventures Pvt. Ltd v. Superintendent Commercial Taxes [WP(C). No. 14275 of 2020 dated July 24, 2020], in similar circumstances, had directed the Revenue Authorities to accept the belated returns and permitted the assessee to discharge the balance tax liability inclusive of any interest and late fee thereon, in equal monthly instalments commencing from August 25, 2020 and culminating on March 25, 2021.

Further, the Hon’ble Kerala High Court in Malayalam Motors Pvt. Ltd. v. The Assistant State Tax Officer [WP(C). No. 21490 of 2020(I) dated October 12, 2020] had held that, the assessee who has sought an instalment facility to pay the admitted tax, together with interest thereon, shall be permitted to discharge the tax liability, inclusive of any interest and late fee thereon, in equal successive monthly instalments, in view of the financial difficulties faced by it during the COVID pandemic situation.

Under the provisions of the Central Goods and Services Tax Act, 2017 (“CGST Act”), on the application filed by a taxable person, the Commissioner may give an opportunity to the taxpayer to pay due taxes/demand in installment. However, the taxpayer has to comply with condition as specified in Section 80 of CGST Act 2017 and applicable rules.

Relevant Provision:

Section 80 of the CGST Act:

“Payment of tax and other amount in instalments.

80. 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 instalments 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 instalment 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.”

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FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

Heard Ms. M. Bhattacharjee, the learned counsel for the petitioner. Also heard Mr. S. C. Keyal, the learned Senior Standing Counsel appearing for the GST.

The petitioner is aggrieved because of striking out of the registration of the petitioner firm by the respondent GST causing immense difficulties in getting released the payment due to him against various contractual works in different organization namely Oil India Limited, Digboi Refinery etc. It is the contention of the learned counsel for the petitioner that whatever outstanding was shown in the portal against the name of the petitioner maintained by the respondent GST was duly paid but even then the registration was not restored for which the petitioner has filed this writ petition seeking for an appropriate direction.

Mr. Keyal, the learned Senior Standing Counsel appearing for the GST on 08.07.2021 while the matter was taken up for motion informed this court that as per the instruction available with him, the petitioner is required to pay an amount of Rs. (73,707X2) which is shown outstanding against the interest liability for delayed filing of returns GSTR-3B for the period from October 2018 to April, 2020. Today when the matter was taken up it is submitted by Ms. Bhattacharjee that as per instruction received by her, the petitioner is ready to pay the interest liability subject to necessary demand is made by the respondent GST. It is further contended by Ms. Bhattacharjee that even after the liability shown in the portal was paid, the registration was not restored thereby causing as hereinabove stated immense difficulty in getting the contractual dues from the various organizations.

Ms. Bhattacharjee sought for an appropriate direction to accept the amount shown as interest liability by the respondent GST in installment due to financial crisis faced by the petitioner. Mr. Keyal on the other hand objected to the submission made by Ms. Bhattacharjee for granting the liberty to pay the arrear amount in installment.

I have given due consideration to the submissions made by the learned counsel. There is no dispute that due to non payment of the interest liability for the aforesaid period from October, 2018 to April, 2020 for delayed filing of returns GSTR-3B, the petitioner is required to make the payment and only thereafter, as submitted by Mr. Keyal, the registration of the petitioner shall be restored by the respondent GST. On the other hand, the submission of Ms. Bhattacharjee that due to striking out of the registration of the petitioner he could not collect the contractual dues from the various organizations against the contractual job also cannot be disbelieved.

In view of the same, in my considered opinion let the petitioner approach the concerned authority more specifically the respondent No. 3 along with an application to permit the petitioner to pay the interest liability referred hereinabove in installment as a special case keeping in view the pandemic situation arising out of Covid-19 and on having submitted the said application/representation along with order passed today the same shall be disposed of within a period of outer limit of 7 (seven) days from the date of receipt of the said representation. If all the dues are cleared as per the direction of the respondent No. 3, the registration of the petitioner shall be restored immediately.

With the said observation, this writ petition stands disposed of at this motion stage as consented to by the learned counsel.

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