Section 78 of the CGST Act, provides that any amount payable by a taxable person in pursuance of an order passed shall be paid within 3 months from the date of service of such order. If the same is not paid then recovery proceedings shall be initiated by the department.
Section 79 of CGST Act 2017 pertains to Recovery of Tax. Section 79 contemplates that any amount payable by a person to the Government under any of the provisions of the Act and Rules made thereunder is not paid then the proper officer could recover the amount by one or more modes.
Section 79 provides the various modes of recovery of tax by the proper officer in the following manner:
- The proper officer may recover by deducting the amount from the other amount payable to such person which may be under the control of such officer.
- The proper officer may recover by detaining or selling any goods belonging to such person which are under his control.
- The proper officer may by notice in writing, recover from other person, from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the Government.
- The proper officer may detain any movable or immovable property belonging to or under control of such person and detain the same until the amount payable is paid. If the dues not paid within 30 days, the said property is to be sold and with the proceeds of such sale the amount payable and cost of sale shall be recovered.
- The proper officer may prepare a certificate specifying amount due from such person and send it to collector of the relevant district and collector shall proceed to recover from such person the amount as if it were an arrear of land revenue.
- The proper officer by way of an application to the appropriate Magistrate who in turn shall proceed to recover the amount as if it were a fine imposed by him
- Where any bond or other instrument was executed under this Act or Rules or regulations made there under provided that any amount due under such instrument may be recovered.
- The proper officer of State tax or Union tax, during the course of recovery of said tax arrears from any person may recover unpaid amount of tax, interest, penalty payable to Central Government by such person. Such amount will be recovered as if it were arrear of SGST/UTGST and credit the amount so recovered to the account of Central Government.
- In case the amount recovered is less than the amount due, then such amount will be apportioned among Central Government, State Government & Union Territory in proportion of the amount due to each authority.
However can such amount be recovered in instalments? This has been answered in Section 80 of the CGST Act. According to Section 80, on an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in monthly instalments (max 24), subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed.
If there is a default in payment of any one instalment on its due date, then the whole outstanding balance payable on such date shall become due and payable forthwith and shall, without any further notice being served on the person, be liable for recovery.
Let us refer to the writ petition filed before the High Court in the case of Pazhayidom Food Ventures (P) Ltd vs Superintendent Commercial Taxes (CGST) where a petition was made requesting GST dues in installments
Facts of the Case
- The petitioner is a private limited company registered as a service provider under GST.
- It is the case of the petitioner that while he intends to pay the arrears of tax due for the assessment year 2018-2019 (November 2018 to March 2019), without contesting the same, the respondents have expressed their inability to permit him to pay the arrears of tax in instalments.
- It was the contention of the petitioner that on account of the present COVID pandemic situation, he was not in a position to generate the funds necessary for making a lump sum payment of the admitted tax for the period.
- He therefore sought a direction from this Court to permit him to file the returns without paying the entire admitted tax, but ensuring that the payment of admitted tax, together with interest thereon and applicable late fees etc, is made on or before 31st March 2021.
Contention of Respondent
The respondent pointed out that the provisions of the Act did not provide for the payment of the admitted amount shown in the return in instalments, and hence the relief sought for by the petitioner could not be granted in view of the express provisions of the statute.
Observations of the High Court (HC)
- HC noted that the petitioner was not disputing his liability to tax, or the quantum thereof, for the period in question.
- It only sought an instalment facility to pay the admitted tax, together with interest thereon, in view of the financial difficulties faced by it during the COVID pandemic situation, when its business has come to a total standstill.
- The petitioner has established its genuineness by effecting a payment of Rs.4 lakhs towards the tax liability for the period 2018-2019.
- It was also noted that, as on that date, there was no demand against the petitioner for the unpaid tax amount.
- Under the circumstances, since the petitioner was not disputing his liability, and wished to put a death to the matter, HC directed the respondent to accept the belated return filed by the petitioner for the period November 2018 to March 2019, without insisting on payment of the admitted tax declared therein.
- The respondents were directed to adjust the amount of Rs. 4 Lakhs paid by the petitioner during the pendency of the petition, towards the admitted tax liability, and thereafter permitted him to discharge the balance tax liability, inclusive of any interest and late fee thereon, in equal successive monthly instalments commencing from 25th August 2020 and culminating on 25th March, 2021.
It was also made clear that if the petitioner defaulted in any single instalment, he would lose the benefit of this judgment and it will be open to the respondent to proceed with recovery proceedings for realisation of the unpaid tax, interest and other amounts.