Tax liability can be paid in monthly installments
By: Admin
October 09, 2024
Categories: Important Pronouncements
4 Min Read
The Hon’ble Madras High Court, in the case of M/s Ohm Srinivasa Paper Boards (P.) Ltd. v. Assistant Commissioner of Central GST and Central Excise [Writ Miscellaneous Petition (MD) Nos. 7930 and 7932 of 2022 dated July 03, 2024], allowed the Assessee to pay the outstanding tax amount over a period of 12 monthly installments. The court took into account the company’s accumulated losses and partial payments already made. The balance payment was to be made from August 01, 2024, to July 01, 2025. The writ petition was thereby disposed of.
Facts:
M/s Ohm Srinivasa Paper Boards (P.) Ltd. (“the Petitioner”) is a manufacturing company that had challenged a demand summary under FORM GST DRC-07A, dated August 26, 2021 (“the Impugned Order”). This demand arose from the self-assessment of arrears of tax under the Central Excise Act, 1944 for the period between February 2015 and June 2017.
The Petitioner initially sought to settle the liability through the Sabka Vishwas Scheme (Legacy Disputes Resolution), 2019, but failed to make the payment, rendering the scheme unavailable. The total liability was ₹1,46,79,069/-, out of which the Petitioner paid ₹25,00,000/-, leaving a balance of ₹1,21,79,069/-.
Aggrieved by the Impugned Order and facing financial difficulties, the Petitioner requested permission to pay the balance in installments.
Issue:
Can the Assessee pay the tax liability in installments?
Held:
The Madras High Court allowed the Petitioner to discharge the remaining tax liability through 12 equal monthly installments, starting from August 01, 2024, to July 01, 2025. If the Petitioner fails to make payments, the authorities may proceed with recovery as per the law. The writ petition was accordingly disposed of.
Our Comments:
Under Section 142 of the Central Goods and Services Act (CGST), 2017, which governs miscellaneous transitional provisions, tax dues under the old laws are recoverable as arrears of tax under the CGST Act. This section allows for tax recovery or refunds, depending on the situation.
Several judgments from other High Courts have also granted installment facilities for tax liability, especially considering financial hardships, as in the case of the COVID pandemic.
For instance, the Kerala High Court in Malayalam Motors Pvt. Ltd. v. The Assistant State Tax Officer [WP(C). No. 21490 of 2020(I) dated October 12, 2020], permitted installment payments for tax liabilities due to financial difficulties.
[Click Here for Official Judgment Copy]
