Payment of Interest can be made in installments: Madras HC

Everyday Banking and Retail Assets Vs Office of the Assistant Commissioner (ST) (Madras High Court)

Introduction: The Madras High Court recently addressed the issue of installment payments for tax interest in the case of Everyday Banking and Retail Assets versus the Office of the Assistant Commissioner (ST). In this article, we delve into the background, facts, and the court’s judgment on whether the payment of interest can be made in installments.

The Hon’ble Madras High Court in the case of Everyday Banking and Retail Assets v. Office of the Assistant Commissioner (ST) [Writ Petition No. 35372 OF 2023 January 03, 2024] held that the Petitioner asserts that all tax dues were settled and that the Petitioner requires time to pay interest. Thus, the Petitioner was allowed to pay interest in respect of four assessment years vide caution notice because the business of the assessee was to be directed to pay amounts of interest demanded in three equal monthly installments.

Facts:

Everyday Banking and Retail Assets (“the Petitioner”) were issued a caution notice (“the Impugned Notice”) to pay interest in respect of the Assessment Years 2017-18 to 2020-21.  The Petitioner had paid all the tax dues but required time to pay interest since the Petitioner’s business was affected during the COVID-19 pandemic period.

The Assistant Commissioner (“the Respondent”) required interest payments to be made expeditiously.

Hence, aggrieved by the Impugned Notice the present writ was filed by the Petitioner.

Issue:

Whether payment of interest can be made in installments?

Held:

The Madras High Court in ­­­­­­­­­­Writ Petition No. 35372 of 2023 held as under:

• Observed that, the Petitioner asserts that all tax dues were settled and that the Petitioner requires time to pay interest.
• Held that, the Petitioner pay the amounts demanded in the Impugned Notice in three equal monthly installments. Hence, the Petition was closed.

Conclusion: The Madras High Court’s decision in Everyday Banking and Retail Assets vs. Office of the Assistant Commissioner (ST) provides valuable insights into the flexibility allowed for payment of interest in challenging circumstances. The judgment balances the taxpayer’s concerns with the revenue authority’s need for timely payments. This case sets a precedent for installment payments in similar situations and underscores the court’s consideration of external factors, such as the COVID-19 pandemic, in tax-related matters.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

By this writ petition, the petitioner challenges a caution notice by which the petitioner was called upon to pay interest in respect of four assessment years.

2. The petitioner asserts that all tax dues were settled by the petitioner and that the petitioner requires time to pay interest since the petitioner’s business was affected during the Covid-19 pandemic period. Learned counsel for the petitioner has placed before me an earlier order passed in respect of the petitioner by this Court.

3. Mrs. E. Renganayaki, learned Additional Government Pleader, accepts notice on behalf of the respondents and submits that the petitioner may be directed to make interest payment expeditiously.

4. Upon considering the above submissions and by taking note of the earlier order of this Court, this writ petition is disposed of by directing the petitioner to pay the amounts demanded in the caution notice in three equal monthly installments. The first installment shall be paid on or before 31.01.2024, the second installment shall be paid on or before 29.02.2024 and the last installment shall be paid on or before 28.03.2024. It is clarified that it will be open to the respondent to take action in accordance with law in the event of default by the petitioner in making payments as per the above schedule. No costs. Consequently, W.M.P.Nos.35347 and 35348 of 2023 are closed.

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