Firm granted 48-month GST payment plan despite 24-36 month statutory limits due to financial hardship

The HC allowed a petitioner firm to pay GST dues of Rs. 2,58,30,801/- plus interest and penalty in 48 monthly installments despite statutory limits of 24 installments for Commissioners and 36 for Chief Commissioners. The court exercised discretionary power considering the firm's precarious financial condition after their client ceased business operations. The firm must pay by the 7th of each month, with automatic revival of cancellation order upon default. The department was directed to assess the total amount and determine equal monthly installments.

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Issues:
1. Default in GST payment leading to cancellation of registration
2. Request for installment payment beyond statutory limit

Analysis:
1. The petitioner, a partnership firm providing security services, failed to pay GST dues amounting to Rs. 2,58,30,801/- for the period of March 2018 to November 2020, resulting in the cancellation of their registration under Section 29 of the CGST Act, 2017. Despite submitting an application for revocation of cancellation, it was rejected, prompting the filing of a writ petition challenging the cancellation order.

2. The petitioner expressed willingness to pay the outstanding tax, interest, and penalty but due to financial constraints, requested to pay in 48 installments. The petitioner cited Circular No. 996/3/2015-CX, which allows for installment payments of arrears. The Circular empowers Commissioners to sanction payments in up to 24 monthly installments and Chief Commissioners for up to 36 monthly installments.

3. The High Court noted that while the Circular limits installments to 36, the petitioner sought 48 installments due to financial difficulties. The Court acknowledged its discretionary power under Article 226 of the Constitution but emphasized adherence to statutory limits. However, the Court recognized that denying further installments could lead to the petitioner's inability to pay, resulting in business closure and loss of tax revenue for the Department.

4. To address the situation, the Court, with the agreement of the GST Department, allowed the petitioner to pay the outstanding amount in 48 installments. The determined amount of Rs. 2,58,30,801/- plus interest and penalty would be divided into equal monthly payments, starting from March 1, 2022. Non-compliance would lead to a monthly review and potential reinstatement of the cancellation order without further reference.

5. The Assistant Commissioner, Guwahati, Division-2, was tasked with determining the monthly installments by February 28, 2022, after providing the petitioner with a hearing. As long as the petitioner adheres to the payment schedule, the cancellation of registration would not take effect, barring any defaults by the petitioner.

6. The writ petition was disposed of, subject to the conditions outlined, providing relief to the petitioner while ensuring compliance with the installment payment plan to address the default in GST payment and potential business repercussions.

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