Facility to discharge tax on installment basis where tax liability is admitted by tax payer along with interest.¹

Facts of the case

The petitioner is a service provider having a Private Limited Company registered under Goods and Service Tax Act. In the given case, the petitioner intends to pay the arrear of tax but seeks a direction from the court to permit the petitioner to pay arrear of tax in installments. But the respondents have expressed their inability to permit him to pay arrear of tax in monthly installment,hence the petitioner filed a writ petition.

Submission on behalf of the Petitioner

It was submitted by the petitioner that, in the view of financial difficulties faced by the business in Covid pandemic situation, when business of the petitioner has come to a total standstill, petitioner paid a quantum of his tax liability for the period 18-19. Now, the petitioner wishes to get permission regarding equal successive installments for the remaining tax liability. It is important to note that, there is no demand against the petitioner displaying his tax liability.

It is the intention of the petitioner to allow him to file the return without paying the entire admitted tax, but ensuring that the payment of admitted tax, together with interest thereon and applicable late fees etc. so that entire tax amount can be paid on or before 31.3.21.

Submission by the Respondent

It is the contention of the respondents that the provisions of the Act do not provide for the payment of taxes in installments and hence relief cannot be granted.

Judgment of Honorable Kerala High Court

It was held by the court that, by any means it is not the intention of the petitioner to evade his tax liability. Moreover, he paid some amount towards the tax liability. Now the petitioner only seeks an installment facility to pay admitted tax, together with interest thereon. So, it is appropriate to direct the respondent to accept the belated return filed by the petitioner without insisting on payment of the admitted tax therein. The respondent shall adjust the already paid amount by the petitioner, towards the admitted tax liability and permit the petitioner to discharge balance tax liability inclusive of any interest and late fee thereon, in equal successive installments commencing from 25th August 2020 and culminating on 25th March 2021. It is to be noted that, wherever the petitioner defaults in any single installment, he will lose the benefit of this judgment and respondent will proceed to recover the unpaid amount of tax, interest and other amount as per his discretion.

Our view

From the above discussion, we are of the opinion that it is an absolute useful judgment for the assessee registered under Goods and Service Tax Act. As businesses are in a stand still situation for the on-going COVID-19 situation, the judgment to allow the tax liability in equal monthly installments comes as a breath of fresh air for various businesses. However, it is important to note that, defaulting in one single installment can lead to cancellation of the benefit.

¹Pazhayidom Food Ventures (P) Ltd Vs Superintend Commercial Taxes (CGST)