Assessee allowed for monthly instalment facility to pay the tax liability with interest

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] 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.

Facts:-

Malayalam Motors Pvt. Ltd. (“Petitioner / Company”) is engaged in the business of automobile sales. The Company had filed GSTR-1 returns for the months of February, 2020 to May, 2020, but due to COVID pandemic, it was not in a position to generate the funds necessary for making a lump sum payment of the admitted tax for the said period. The Company, however, intends to pay the arrears of tax dues without contesting the same and it is therefore, the Petitioner seeks a direction from the Court to permit the Petitioner to file the returns without paying the entire admitted tax, but ensuring that the payment of admitted tax, together with interest thereon and applicable late fees etc., will be made in quick instalments.

The Assistant State Tax Officer (“Respondent”) was of the view that the provisions of the Central Goods and Service Tax Act, 2017 (“CGST Act”) do not provide for the payment of the admitted amount shown in the return in instalments.

Issue:-

Whether the relief sought for by the Petitioner can be granted in view of the express provisions of the statute?

Held:-

The Hon’ble Kerala High Court in WP(C). No. 21490 OF 2020(I) dated October 12, 2020 held as under:-

• The Petitioner is not disputing its liability to tax, or the quantum thereof, for the period in question and wishes to put a quietus to the matter. It only seeks an instalment facility to pay the admitted tax, together with interest thereon, in view of the financial difficulties faced by it during the COVID pandemic situation, when its business has come to a total standstill.
• The Court deems it appropriate to direct the Respondent to accept the belated return filed by the Petitioner for the period from February, 2020 to May, 2020, without insisting on payment of the admitted tax declared therein. The Petitioner shall be permitted to discharge the tax liability, inclusive of any interest and late fee thereon, in equal successive monthly instalments commencing from November 15, 2020 and culminating on August 15, 2021.
• Clarified that, if the Petitioner defaults in any single instalment, the Petitioner will lose the benefit of this judgment and it will be open to the Respondent to proceed with recovery proceedings for realisation of the unpaid tax, interest and other amounts, in accordance with law.

Comments:-

Earlier, the Hon’ble Kerala High Court in the matter of Pazhayidom Food Ventures (P) Ltd v. Superintendent Commercial Taxes [WP(C). No. 14275 of 2020 dated July 24, 2020], in similar circumstances, had directed the respondent tax authority to accept the belated returns and permitted the petitioner therein 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.

Relevant provision:-

Section 80 of the CGST Act

“80. Payment of tax and other amount in instalments.

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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