05.03.2022- GST Demand Allowed To Be Paid In Installment Considering Precarious Financial Condition, GST Cancellation Conditionally Revoked: Guwahati HC

The Hon’ble High Court of Gauhati vide its order dated 15 February 2022 in the matter of Veteran Security Vs the Union of India & Ors.  in WP (C )/924/2022 allowed the asseessee to pay the amount of tax in 48 monthly installments in order to revive its GST registration.

The Petitioner preferred the Writ Petition against the order of cancellation of registration dated 19.01.2021 and the order dated 18.05.2021 rejecting the application for revocation of cancellation of registration.

Facts:

  • The petitioner is duly registered under the GST Act and providing the security services, as per the law is required to file monthly returns under GST in Form GSTR-1.
  • Because of loss in business, the petitioner could not make the payment of GST for the period March, 2018 to November, 2020 and is at default amounting to Rs. 2,58,30,801/- along with interest under section 50 and penalty under Section 125.
  • Consequently, for non-payment of tax, the GST registration of the petitioner was cancelled and also the application for revocation of cancellation was rejected vide orders dated 19.01.2021 and 18.05.2021 respectively. Thus, the present Writ.

Petitioner’s Plea:

  • The required GST could not be paid due to loss in business on account of non-payment huge amount from one of the service receivers i.e., AIRCEL.
  • The Petitioner is willing to the amount of GST along with the amount of interest and penalty however due to its bad and uncertain financial condition is not in a position to do so, thus requests that it should be allowed to pay the required amount of tax in 48 installments.
  • The petitioner referred to the Circular 996/3/2015-CX dated 28.02.2015 of the Under Secretary to the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, and submitted maximum of 36 installments can be allowed by the Chief Commissioner, thus seeks to invoke the discretionary powers of the Court in allowing them to pay the Tax in 48 installments.

Held:

  • The Hon’ble High Court after considering the submissions and referring to Circular No. 996/3/2015-CX dated 28.02.2015, observed that it is quite evident from the para 5 of the Circular that the Commissioner of GST is empowered to grant sanction to pay arrears of GST in maximum of 24 monthly installments & the Chief Commissioner has the authority to sanction the payment of arrears up to a maximum of 36 installments.
  • The Hon’ble Court observing it has the inherent power under Article 226 of the Constitution of India to use a discretion took a note that if the petitioner is not allowed to extend the installments beyond 36 (provided by Statue), it may result in sustenance of order of cancellation of registration and it would bring the business to end, eventually be the end of the department to have any tax from the petitioner.
  • The Hon’ble Court exercising its discretionary powers and in order to provide some support to the petitioner firm, allowed the amount of arrears of GST to be paid in 48 monthly installments, and each installment to be made by 7th of every month.
  • It was further held that the Assistant Commissioner, Guwahati will determine the amount of monthly installments to be paid by the petitioner, there shall be a periodical review by the department authority every month, and in case of default on the part of the petitioner to pay the tax, the order of cancellation may be revived by the department however if the petitioner firm continues to pay the amount determined, the order of cancellation of registration would have no effect.

The Hon’ble High Court with the above findings disposed of the Writ Petition subject to conditions stated therein.

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