2022 (4) TMI 349 - HC - GST

Cancellation of registration of petitioner - petitioner firm express their willingness to pay the defaulted tax amount plus the interest and the penalty as may be assessed by the department but because of the precarious financial condition they are unable to pay it in one go - requesting to be allowed to make the necessary payments in 48 installments - Circular No. 996/3/2015-CX dated 28.02.2015 - HELD THAT - Although there may be an inherent power of the Court under Article 226 of the Constitution of India to use a discretion but at the same time when it is statutorily provided by the departmental authorities that the maximum permissible installments be 36 (thirty six), the Court ought not to randomly extend such installments beyond 36 (thirty six) in the guise of exercising discretionary power but at the same time, it is also noted that if further installments are not allowed to the petitioner firm, they would be unable to pay the tax due and it may result in a sustenance of the order of cancellation of their registration. If it is so, there would be an end of their business in the present form that they are undertaking and it would also be the end of the Department to have any tax from the petitioners in the form of the present business any further. Without taking any specific view on the aforesaid aspect and in order to provide some succor to the petitioner firm so that they can remain in the business they are presently undertaking, it is provided that the amount of ₹ 2,58,30,801/- plus the interest and the penalty that may be applicable under the law be evaluated by the department and the assessed amount be determined. The said amount be equally divided by 48 and the monthly amount payable by the petitioner firm be determined and communicated to the petitioner. Upon such determination the petitioner firm shall pay the determined monthly installments within the 7th of every month - the determination of the equal monthly installments to be paid by the petitioner firm be determined by the Assistant Commissioner, Guwahati, Division-2 on or before 28.02.2022 and in doing do, the petitioner firm may also be given a hearing and the petitioner firm shall cooperate with the authority. Upon such determination, the requirement of payment shall start from 1st of March, 2022 Petition disposed off.

Summary

Issues:
1. Default in GST payment leading to cancellation of registration.
2. Request for payment in installments beyond statutory limit.
3. Discretionary power of the Court in allowing extended installments.

Issue 1: Default in GST payment leading to cancellation of registration

The petitioner, a partnership firm providing security services, faced a default of ?2,25,09,077 for the period of April 2018 to September 2021, along with interest and penalty under the CGST Act, 2017. Due to non-payment, their registration was canceled as per Section 29 of the CGST Act, 2017. Despite applying for revocation, their request was rejected, leading to the filing of a writ petition challenging the cancellation order.

Issue 2: Request for payment in installments beyond statutory limit

The petitioner expressed willingness to pay the outstanding tax, interest, and penalty but due to financial constraints, requested to pay in 48 installments. Referring to Circular No. 996/3/2015-CX, the petitioner sought approval for extended installments beyond the statutory limit of 36, citing their inability to pay within the prescribed period due to financial difficulties.

Issue 3: Discretionary power of the Court in allowing extended installments

The Court acknowledged its discretionary power under Article 226 of the Constitution of India but noted the statutory provision limiting installments to 36. Balancing the petitioner's financial constraints and the need for tax compliance, the Court engaged the GST Department to consider extending installments to 48. The Department agreed, subject to concerns about the petitioner's past conduct.

In the final judgment, the Court decided to grant the petitioner's request for 48 installments to pay the assessed amount of ?2,58,30,801 plus interest and penalty. The monthly installment amount would be determined by the Assistant Commissioner, and non-compliance would result in a periodic review and possible reinstatement of the cancellation order. The petitioner was required to start payments from March 1, 2022, and compliance would ensure the registration cancellation had no effect, barring any defaults by the petitioner.