2019 (5) TMI 893 - HC - GST

Recovery of arrears of taxes under the APGST Act and CST Act - grant of facility of payment by installments - wilful defaulter or not - HELD THAT - Under normal circumstances a person who secured the facility of payment by installments and who committed default in complying with the same may not be entitled to any indulgence - But the facts of the case are little peculiar. It is seen from the representation made by the petitioner that the petitioner became a sick company from the year 2011 and their account was declared as Non-Performing Asset by the State Bank of India. It appears that in the year 2017 the bank accepted a One Time Settlement (OTS) and the petitioner came out of the woods. The company is on the path to recovery. Unfortunately at the time when the petitioner secured an order for payment by installments they also had the OTS Scheme sanctioned from the bank. Therefore obviously the priority went towards clearing the dues of the bank. Hence the petitioner cannot be said to be a willful defaulter disentitled to any indulgence. Today it appears that the liability is around Rs. 99.00 lakhs according to the Department. There are 100 people working in the Company. Therefore while it is necessary to recover the tax arrears it is also necessary to keep the Industry alive. The Writ Petition is disposed of granting the facility of payment of the arrears of taxes in twelve (12) equal monthly installments with the first of such installment being paid on or before 15th April 2019 and all subsequent installments being paid on or before 15th of every succeeding English Calendar Month.

Summary

Issues:
Request for payment of tax arrears in installments under APGST Act and CST Act.

Analysis:
The petitioner sought a direction to consider their request for paying tax arrears in installments under the APGST Act and CST Act. The Commissioner had previously granted this facility, but the petitioner defaulted on the payments. Subsequently, the petitioner approached the Deputy Commissioner, who was unable to assist due to non-compliance with previous orders. The petitioner's financial situation was outlined, indicating that they had faced difficulties and were declared a Non-Performing Asset by a bank. Despite having an order for installment payments, the petitioner prioritized clearing dues with a One Time Settlement (OTS) scheme from the bank, showing a commitment to recovery. The court acknowledged the need to recover tax arrears while ensuring the industry's survival, considering the 100 employees dependent on the company. As a result, the court granted the petitioner the opportunity to pay the tax arrears in twelve equal monthly installments, starting from a specified date, with a warning of further action in case of default. No costs were awarded, and pending miscellaneous petitions were closed as a consequence of the judgment.