2022 (5) TMI 1293 - HC - GST

Interest on belated deposit of admitted tax in instalment u/s 80 read with Rule 158 - Request to make payment in Installments - self-assessed returns furnished in terms of section 39 read with section 59 of CGST/OGST Act - HELD THAT - When the levy of interest emanates as a statutory consequence and such liability is a direct consequence of non-payment of tax, such a levy is different from the levy of interest which is dependent on the discretion of the assessing officer. The default arising out of non-payment of tax on an admitted liability in the case of self-assessment attracts automatic levy of interest, whereas the default in filing incomplete and incorrect return attracts best judgment assessment in which the levy of interest is based on the adjudication by the assessing officer. In equity, interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor. Interest is also payable where there has been misconduct or improper delay in payment, or in the case of money obtained or retained by fraud. It may also be allowed where the defendant ought to have done something which would have entitled the plaintiff to interest at common law, or has wrongfully prevented the plaintiff from doing something which would have so entitled him. However, payment of tax is not under a contract between the taxpayer and the State. There is plain repugnance between contract and taxation. Taxation is the very antithesis of contract. In the present case the admitted tax on self-assessment being not deposited within the period stipulated, the petitioner is liable to compensate the State Government by way of interest which is provided for under the statute. Plain reading of the provisions of Section 80 admits of no ambiguity that the Commissioner of CT GST is empowered to allow the payment of any amount due under the Act in monthly instalments not exceeding twenty-four subject to payment of interest under Section 50 and also subject to such condition and limitation under Rule 158. One of the conditions is reflected in the said provision itself, i.e., the instalment cannot be allowed in the circumstance when the liability to be discharged is on account of self-assessed returns. Therefore, necessary corollary would be that the Commissioner of CT GST is empowered to invoke Section 80 for allowing taxpayer to discharge liability in instalment when demand is raised under the statute - The term instalments in general parlance would mean equated periodical payments (money due) spread over an agreed period of time. This provision happens to be a beneficial piece of law to the tax payers to pay the demand in instalments along with interest. Nonetheless, as stated earlier, the amount should not be the amount due as per the liability as self-assessed in any return. Therefore, the amount which is payable pertains to a demand notice can be deferred or paid in instalments. It is admitted fact on record that the petitioner has deposited an amount of tax admitted in self-assessed returns beyond the time stipulated under Section 39 and hence the CT GST Officer, Bhubaneswar-II Circle, Bhubaneswar had raised demand of interest to the tune of Rs.68,15,506/- vide GST DRC-07 for the period April 2019 to December 2019 - Since interest is a part of tax and such tax being belated payment in respect of self-assessment, Section 80 of the OGST Act clearly excludes grant of instalment under the present fact-situation. However, the Commissioner is not conferred with power to allow such instalment in respect of amount due as per self-assessment return(s) furnished. Section 80 empowers the Commissioner to grant permission only to the taxable person to make payment of any amount due on instalment basis, on an application filed electronically in Form GST DRC-20 as prescribed under Rule 158. The Commissioner of CT GST is justified in rejecting the prayer of the petitioner to deposit the interest levied on account of belated deposit of admitted tax as per self-assessed returns furnished in terms of Section 39 read with Section 59 of the CGST/OGST Act in instalment under Section 80 read with Rule 158 - Petition dismissed.

Summary

Issues Involved:
1. Justification of the Commissioner of CT & GST in rejecting the petitioner's request to pay interest on belated tax deposits in installments under Section 80 of the OGST Act, 2017 read with Rule 158.

Detailed Analysis:

1. Context and Legal Framework:
The petitioner challenged the order dated 8th February 2022 by the Commissioner of CT & GST, Odisha, which was against the demand of interest for delayed tax deposits from April 2019 to December 2019. The petitioner sought relief under Article 226/227 of the Constitution of India, questioning the legality and fairness of the order and requesting the payment of interest in 24 installments.

2. Petitioner's Argument:
The petitioner argued that the delay in tax payment was due to non-disbursal of funds from a government agency. Despite the eventual deposit of the tax amount, the petitioner was unable to pay the accrued interest immediately and sought installment payments. The petitioner's counsel contended that the Commissioner misinterpreted Section 80 of the OGST Act, which should have allowed the payment of interest in installments.

3. Respondent's Argument:
The respondent emphasized the statutory requirements under the OGST Act, particularly Section 50(1), which mandates the payment of interest on delayed tax payments. The respondent argued that the law requires specific procedures to be followed, and any deviation is not permissible. The respondent supported the Commissioner's decision, stating that the statute does not allow installment payments for self-assessed tax liabilities.

4. Legal Provisions and Interpretations:
- Section 39 of the OGST Act: Requires registered persons to furnish returns and pay taxes by the 20th of the succeeding month. Any delay necessitates the payment of interest.
- Section 50 of the OGST Act: Mandates interest on delayed tax payments, which is compensatory and not penal in nature. The liability to pay interest arises automatically without any assessment.
- Section 80 of the OGST Act: Allows the Commissioner to extend the time for payment or permit installment payments, but explicitly excludes amounts due as per self-assessed returns.

5. Court's Analysis:
The court noted that the liability to pay interest under Section 50(1) is automatic and self-determined, arising from the taxpayer's failure to pay the tax within the prescribed period. The interest is compensatory, meant to cover the loss to the revenue due to delayed payments. The court referenced several precedents affirming that interest accrues automatically and does not require a separate order.

The court further analyzed Section 80, concluding that it does not apply to self-assessed tax liabilities. The provision is designed to allow installment payments for other dues under the Act, not for amounts self-assessed and declared in returns. The court emphasized the clear language of the statute, which must be interpreted as written without adding or implying any terms.

6. Conclusion:
The court upheld the Commissioner's decision, stating that the statute does not permit installment payments for self-assessed tax liabilities. The petitioner's request was rightly rejected as per the explicit provisions of Section 80 of the OGST Act. The writ petition was dismissed, affirming the automatic and compensatory nature of the interest liability under Section 50(1).

Summary:
The judgment reaffirmed the statutory obligation to pay interest on delayed tax payments and clarified that Section 80 of the OGST Act does not allow installment payments for self-assessed tax liabilities. The court emphasized the automatic nature of interest accrual and the necessity to adhere to the explicit language of the statute.