Tax authorities to review GST payment plan due to working capital shortage

The court directed the tax authorities to review the petitioner's application to pay pending GST dues in instalments due to severe working capital shortage. The judge emphasized the need for a thorough consideration of the challenges faced by small traders under the Goods and Service Tax regime. The petitioner was instructed to appear for further proceedings, and the case was disposed of without costs, with connected petitions closed.

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Issues:
Challenge to cancellation of registration for non-filing of returns, interpretation of Section 30 of the Goods and Service Tax Act, 2017, consideration of circulars issued by the Centre and State regarding relaxation of time limits for return submissions, granting leave to pay pending GST dues in instalments.

Analysis:

The petitioner challenged the cancellation of registration due to non-filing of returns, arguing that GSTR 3B returns were filed up to December 2017 and GSTR-1 only up to August 2018. The petitioner received a show cause notice for cancellation on 04.10.2018 and responded on 10.10.2018, citing severe working capital shortage as the reason for the delay. The impugned order was passed without considering the objections raised by the petitioner.

The learned Standing Counsel highlighted Section 30 of the Goods and Service Tax Act, 2017, which mandates filing returns for the entire period of noncompliance along with tax dues to revoke the cancellation of registration. Both counsels referred to circulars issued by the Centre and State relaxing time limits for return submissions, acknowledging the evolving nature of the Goods and Service Tax regime and the challenges faced by small traders.

The judge refrained from delving into the details of the circulars, noting that neither counsel could clarify the prevailing position regarding extended/applicable time limits for return submissions. Considering the circumstances, the judge directed the Principal Secretary/Commissioner of Commercial Taxes to review the petitioner's application dated 18.12.2018, seeking to pay pending GST dues in six monthly instalments. The petitioner had already paid the first instalment of Rs. 10,00,000 on 14.12.2018. The Principal Secretary/Commissioner was instructed to consider the technical difficulties faced by the petitioner, the lack of business transactions due to registration cancellation, and relevant circulars in making a decision.

The petitioner was ordered to appear before the Principal Secretary/Commissioner of Commercial Taxes on 04.03.2019 for further proceedings. The judge disposed of the Writ Petition with the aforementioned directions, without imposing any costs. Connected Miscellaneous Petitions were closed accordingly.

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