Facts of the Case

The petitioners, Gemar Lollen and M/s M. L. Enterprise, approached the Gauhati High Court by filing a writ petition seeking setting aside of the notice dated 12 September 2022 issued by the Superintendent of Tax, Excise & Narcotics, West Siang District, Aalo.

Through the said notice, the petitioners were directed to pay interest amounting to ₹20,09,046 under Section 73 of the Goods and Services Tax Act within 30 days from the date of issuance of the notice.

The petitioners also sought a direction to the concerned respondent authorities to permit payment of the interest specified in the notice dated 12 September 2022 in instalments under Section 80 of the State Goods and Services Tax Act, 2017.

The petitioners did not dispute the payable interest mentioned in the notice. Their principal grievance was that the amount of interest should be permitted to be paid in instalments under Section 80 of the State Goods and Services Tax Act, 2017.

The petitioners contended that despite having submitted a representation dated 9 August 2022 to the Superintendent of Tax, Excise & Narcotics, West Siang District, Aalo, followed by a forwarding letter dated 10 August 2022, the authorities had not allowed payment of the interest amount in instalments.

Issues Involved

The principal issues arising for consideration were:

  1. Whether the petitioners could seek payment of the admitted GST interest liability of ₹20,09,046 in instalments under Section 80 of the State Goods and Services Tax Act, 2017.
  2. Whether the petitioners had approached the competent authority empowered to consider a request for instalment payment under Section 80.
  3. Whether the High Court should interfere with and set aside the notice dated 12 September 2022 directing payment of interest within 30 days.
  4. Whether liberty should be granted to the petitioners to submit a proper representation before the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh, for consideration under Section 80 of the State Goods and Services Tax Act, 2017.

Petitioner’s Arguments

The petitioners submitted that they were not denying the interest liability mentioned in the notice dated 12 September 2022.

Their case was that the payable interest could be permitted to be discharged in instalments under Section 80 of the State Goods and Services Tax Act, 2017.

The petitioners contended that the respondent authorities had not permitted payment in instalments despite the representation dated 9 August 2022 submitted to the Superintendent of Tax, Excise & Narcotics, West Siang District, Aalo, and the forwarding letter dated 10 August 2022.

It was further contended that the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh, was the authority empowered to permit payment of the payable interest in instalments under Section 80 of the State Goods and Services Tax Act, 2017.

Respondent’s Arguments

The respondents were represented by the learned Additional Senior Government Advocate.

The Court noted a material procedural deficiency in the petitioners’ case. Although the petitioners contended that the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh, was empowered to consider instalment payment under Section 80, the petitioners were unable to demonstrate that any representation seeking such relief had actually been submitted to the Commissioner.

The representation relied upon by the petitioners had been submitted to the Superintendent of Tax, Excise & Narcotics, West Siang District, Aalo. Further, the recommendation referred to by the petitioners appeared to have been addressed to the Senior Audit Officer (GST).

Accordingly, there appeared to be no representation made by the petitioners to the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh, seeking payment of the interest liability in instalments.

Court Order / Findings

The Gauhati High Court observed that although the petitioners claimed that the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh, was empowered to allow payment in instalments under Section 80 of the State Goods and Services Tax Act, 2017, no representation had been shown to have been submitted to that authority.

The Court found that the earlier representation had been submitted to the Superintendent of Tax, Excise & Narcotics, West Siang District, Aalo, and that the recommendation relied upon by the petitioners appeared to have been made to the Senior Audit Officer (GST).

In these circumstances, the High Court disposed of the writ petition by granting liberty to the petitioners to file a representation under Section 80 of the State Goods and Services Tax Act, 2017, before the appropriate authority, namely, the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh, Itanagar.

The Court further observed that upon such an application being filed, the Commissioner may examine:

  • the representation on its own merits; and
  • the applicability of Section 80 of the State Goods and Services Tax Act, 2017, having regard to the facts and circumstances of a case of this nature, as contended by the petitioners.

Accordingly, the writ petition was disposed of with the above observations.

Important Clarification

The judgment does not hold that every GST interest liability is automatically eligible for payment in instalments under Section 80 of the State Goods and Services Tax Act, 2017.

The High Court also did not directly grant an instalment facility to the petitioners.

The Court merely granted liberty to the petitioners to submit a representation under Section 80 before the competent authority, namely, the Commissioner, Tax, Excise & Narcotics Department, Government of Arunachal Pradesh.

The Commissioner was left free to examine the representation on its own merits and to determine the applicability of Section 80 in the particular facts and circumstances of the case.

Therefore, the significant principle emerging from the order is that where a taxpayer seeks an instalment facility under Section 80, the request should be placed before the appropriate competent authority. The availability of such relief remains subject to examination on merits and the applicability of the statutory provision to the facts of the particular case.

Sections Involved

Section 73 of the Goods and Services Tax Act — Provision referred to in the impugned notice directing payment of interest amounting to ₹20,09,046 within 30 days from the date of issuance of the notice.

Section 80 of the State Goods and Services Tax Act, 2017 — Provision relied upon by the petitioners for seeking permission to pay the payable interest in instalments.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783676768_2109compressed.pdf

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