Struggling Security Firm Granted 48-Month GST Payment Plan Beyond Statutory 36-Month Limit Under Article 226 Powers

The HC allowed a partnership firm providing security services to pay outstanding GST dues of Rs. 2,25,09,077 plus interest and penalty in 48 monthly installments, exceeding the statutory limit of 36 installments. The firm's GST registration had been canceled due to non-payment, and their revocation application was rejected. The Court exercised discretionary power under Article 226, balancing the firm's financial constraints with tax compliance needs. The GST Department agreed to the extended installment plan subject to compliance. The first payment was to begin March 1, 2022, with the Assistant Commissioner determining the monthly amount.

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Issues:
1. Default in GST payment leading to cancellation of registration.
2. Request for payment in installments beyond statutory limit.
3. Discretionary power of the Court in allowing extended installments.

Issue 1: Default in GST payment leading to cancellation of registration

The petitioner, a partnership firm providing security services, faced a default of Rs. 2,25,09,077 for the period of April 2018 to September 2021, along with interest and penalty under the CGST Act, 2017. Due to non-payment, their registration was canceled as per Section 29 of the CGST Act, 2017. Despite applying for revocation, their request was rejected, leading to the filing of a writ petition challenging the cancellation order.

Issue 2: Request for payment in installments beyond statutory limit

The petitioner expressed willingness to pay the outstanding tax, interest, and penalty but due to financial constraints, requested to pay in 48 installments. Referring to Circular No. 996/3/2015-CX, the petitioner sought approval for extended installments beyond the statutory limit of 36, citing their inability to pay within the prescribed period due to financial difficulties.

Issue 3: Discretionary power of the Court in allowing extended installments

The Court acknowledged its discretionary power under Article 226 of the Constitution of India but noted the statutory provision limiting installments to 36. Balancing the petitioner's financial constraints and the need for tax compliance, the Court engaged the GST Department to consider extending installments to 48. The Department agreed, subject to concerns about the petitioner's past conduct.

In the final judgment, the Court decided to grant the petitioner's request for 48 installments to pay the assessed amount of Rs. 2,58,30,801 plus interest and penalty. The monthly installment amount would be determined by the Assistant Commissioner, and non-compliance would result in a periodic review and possible reinstatement of the cancellation order. The petitioner was required to start payments from March 1, 2022, and compliance would ensure the registration cancellation had no effect, barring any defaults by the petitioner.

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