2021 (12) TMI 1099 - HC - GST

Cancellation of registration of the petitioner - due to loss incurred, the taxes for the period from December, 2017 to December, 2018 could not be paid which was compounded due to non-receipt of incentives by the State Government - HELD THAT - For serving the larger ends of justice and balancing equities, moreso, in view of the fact that, if the industry starts functioning, it would be in a position, both to satisfy the demand of the respondents as also generate business and to pay future taxes and equally give employment to the workers, the Court is inclined to allow the petitioner to pay the amount as would be quantified by the respondents in ten (10) equal installments. Let respondent no.2 quantify the actual amount which the petitioner is required to pay with regard to penalty and interest and indicate the same to the petitioner within two weeks. Upon doing so, the petitioner shall pay the amount in ten (10) equal installments to be paid on or before the 5th day of each month commencing from 15.01.2022 As a consequence, let authorities restore the registration of the petitioner within two (02) weeks from the date of receipt of a copy of this order. Any default in repayment as per the schedule indicated would also automatically result in cancellation of the registration of the petitioner. - petition disposed off.

Summary

Issues:
1. Rejection of application under Section 80 of the CGST Act, 2017 and cancellation of registration.
2. Relief sought for fixing installments for payment of dues.
3. Quantification of penalty and interest for repayment.
4. Restoration of registration and granting time for payment in installments.

Analysis:
1. The petitioner challenged the rejection of the application under Section 80 of the CGST Act, 2017 and the cancellation of registration. The petitioner, engaged in the cotton business, faced financial difficulties leading to unpaid taxes compounded by non-receipt of state incentives. The petitioner sought indulgence to restart operations, repay dues, and contribute towards future taxes. The Court considered the petitioner's plea in light of the potential business revival, tax contributions, and employment generation. Consequently, the Court allowed the petitioner to pay the outstanding amount in ten equal installments.

2. The petitioner requested relief in fixing installments for the payment of dues. The respondents calculated the remaining amount due at approximately ?1.25 crores. The petitioner's counsel urged the authorities to quantify penalty and interest for repayment, suggesting a specific amount for installment repayment. The Court, considering the larger interest of justice and economic factors, directed the authorities to quantify the payable amount and allow the petitioner to repay in ten equal installments starting from a specified date.

3. The quantification of penalty and interest for repayment was a crucial aspect of the case. The petitioner's counsel emphasized the need for a specific figure to facilitate installment payments. The respondents were instructed to disclose the exact amount due within two weeks, enabling the petitioner to commence repayment in equal installments. The Court's decision aimed to strike a balance between the petitioner's financial obligations and the potential benefits of business revival and tax compliance.

4. The issue of restoration of registration and granting time for payment in installments was pivotal. The Court ordered the authorities to restore the petitioner's registration within two weeks from the date of the order. Failure to adhere to the repayment schedule would result in automatic cancellation of registration. This directive underscored the importance of timely repayment and compliance with the installment plan. The Writ Petition was disposed of with no costs, and any pending miscellaneous petitions were also resolved accordingly.