2021 (12) TMI 521 - HC - GST

Input tax credit - credit is overlooked on account of non-payment of the tax due - HELD THAT - The adjustment on account of the orders passed in the appeals referred to above and on account of ITC, if any, will be only against the last installment - In default of payment of any installment within the time permitted, the balance amount then due will become automatically payable and it will be open to the CGST authorities to proceed for realization thereof in accordance with law. It is made clear that the interest that is required to be paid by this order and after the completion of the installments payment in terms of this order will be calculated on reducing balance basis in respect of the tax due component and not in any respect of the penalty or interest already added into the figure of ₹ 43,49,50,071/- - Immediately upon the first installment payment being made in terms of this order, the order cancelling the GST registration of the appellant assesse dated February 10, 2021 will stand annulled and the respondent authorities should immediately restore the assesse s access to the relevant portal and all other facilities as in any normal case. Let a copy of the letter dated December 3, 2021 be retained in the records.

Summary

Issues:
1. Agreement on payment terms and modalities between parties.
2. Adjustment of figures indicated in the letter dated December 3, 2021.
3. Overlooking input tax credit due to non-payment of tax.
4. Total amount due and proposed payment in monthly installments.
5. Schedule and mode of payment for the total amount due.
6. Adjustment against last installment for appeals and input tax credit.
7. Consequences of default in payment of installments.
8. Liability to pay interest on reducing balance basis.
9. Clarification on calculation of interest component.
10. Requirement to continue paying current GST dues.
11. Annulment of GST registration cancellation upon first installment payment.
12. Retention of the letter dated December 3, 2021 in records.
13. Disposal of WP (C) No. 344 of 2021.
14. No order as to costs.

Analysis:
1. The judgment records that the parties have agreed in principle to the payment terms but have left the modalities to be determined by the Court. This indicates a mutual understanding on the payment structure, with the Court tasked to finalize the specifics.

2. The appellants have accepted the figures mentioned in the letter dated December 3, 2021, issued by the Assistant Commissioner, CGST. However, they assert that these figures are subject to adjustment based on pending appeals for the period of 2017-18. This highlights the need for potential modifications to the indicated figures.

3. The appellants claim that the input tax credit has been overlooked due to non-payment of tax. The CGST authorities acknowledge this and agree that upon tax payment, the appellants may be eligible for the input tax credit. The agreement is to adjust this credit with the last installment payment, subject to compliance with legal requirements.

4. The total amount due is &8377; 43,49,50,071, and the appellants propose to pay this sum in 24 monthly installments. This structured payment plan aims to facilitate the settlement of the outstanding amount over a defined period.

5. The judgment specifies that the entire outstanding amount should be paid in 24 equal or nearly equal monthly installments, starting from December 15, 2021, and payable by the 15th day of the following 23 months. This delineates the timeline and mode of payment for the appellants.

6. Any adjustments related to pending appeals and input tax credit will only be made against the last installment. This provision ensures that any modifications to the initial figures are accounted for in the final payment.

7. In case of default in installment payment, the balance amount becomes immediately due, empowering the CGST authorities to take necessary actions for recovery in accordance with the law. This clause emphasizes the consequences of non-compliance with the payment schedule.

8. The appellants are liable to pay interest on a reducing balance basis on the tax due component of the total amount, excluding adjustments for appellate orders or input tax credit. The interest calculation occurs after the final installment payment, with the entire interest amount due within 60 days of the last installment deadline.

9. The judgment clarifies that the interest calculation is based on the reducing balance of the tax due component, distinct from penalties or previously added interest. This distinction ensures a specific calculation method for the interest component.

10. The appellants are instructed to continue paying their current GST dues without seeking concessions based on the payment arrangement outlined in the judgment. This directive underscores the ongoing obligation to fulfill regular GST obligations.

11. Upon the first installment payment, the order canceling the GST registration of the appellants will be annulled, restoring their access to relevant portals and facilities. However, failure to adhere to the payment terms may result in registration cancellation and portal access denial, unless rectified promptly.

12. The judgment mandates the retention of the letter dated December 3, 2021, in the records for future reference and documentation purposes.

13. The case WP (C) No. 344 of 2021 is disposed of based on the terms and agreements outlined in the judgment, signifying the resolution of the legal matter under consideration.

14. No costs order is issued, indicating that each party is responsible for their respective expenses related to the legal proceedings.