Under GST law if the taxpayer cannot pay all the GST dues (tax/interest/penalty) in a lump sum or within the stipulated date, then he can file an application to the Commissioner requesting to pay the GST liability in installments. In this regard a recent Kerala High Court Judgment is relevant where the Hon’ble Court has allowed the taxpayer to make GST payment in installments. Lets discuss this judgment.
The Hon’ble Kerala High Court in its recent ruling in the case of Malayalam Motors Pvt. Ltd. v. The Assistant State Tax Officer [WP(C). No. 21490 of 2020(I)] has 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 of the Case:
- The petitioner, M/s Malayalam Motors Pvt. Ltd. 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 Respondent viz Assistant State Tax Officer was of the view that the provisions of the CGST Act do not provide for the payment of the admitted amount shown in the return in instalments.
Issue involved:
Whether the relief sought for by the Petitioner can be granted in view of the express provisions of the statute ? i.e. whether assessee can be allowed to make GST liability payment in installments.
Ruling of Kerala High Court: Allowing taxpayer to make GST payment in installments
The Hon’ble Kerala High Court 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.
Our Comments:
In our view the judgment of the Kerala High Court is on right footing and in line with the provisions of Section 80 of the CGST Act,2017.
It is pertinent to mention here that 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] vide its order 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.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
