Uttarakhand High Court Grants Relief: GST Dues Can Be Paid in Installments under Section 80

Suraj Enterprises, a business engaged in the garment trade in Uttarakhand, faced a tax demand of ₹17,21,389 under the Goods and Services Tax (GST) regime. After the cancellation of its GST registration and issuance of penalty and demand notices, the taxpayer sought relief from the High Court. The primary request was to quash the penalty order and allow payment of the outstanding GST dues in instalments because of financial constraints.

Legal Provision: Section 80 of the GST Act, 2017

Section 80 of the Central Goods and Services Tax Act, 2017 empowers the Commissioner or any competent authority to permit a taxpayer to pay outstanding tax dues in monthly instalments (up to 24 instalments), subject to interest and conditions. If a taxpayer defaults on any one instalment, the entire remaining balance becomes immediately payable.

Submissions Before the Court

Petitioner’s argument: Suraj Enterprises expressed inability to pay the full amount at once and requested permission to clear the dues in instalments.

State’s response: The State’s counsel stated there was no objection if the petitioner approached the GST Commissioner or other competent authority under Section 80 to seek instalment relief.

High Court’s Directions

The Uttarakhand High Court, after hearing both sides, issued the following order:

Application Deadline: The petitioner must file an application within 10 days to the Commissioner/Competent Authority seeking permission for payment in instalments under Section 80.

Decision Timeline: The Commissioner must decide the application within two weeks of receiving it.

No Coercive Action: Until the Commissioner takes a decision, no coercive recovery action can be initiated against the petitioner.

Failure to Apply: If the petitioner does not file the application within 10 days, the tax authorities are free to recover the dues as per law.

Significance of the Order

Relief for Taxpayers: The judgment reinforces that businesses facing temporary financial difficulties can lawfully seek payment in instalments.

Clear Process Guidance: The order clarifies that an application under Section 80 is the proper route for seeking instalment relief and that the tax department must respond within a fixed time frame.

Balance of Interests: The court has balanced the taxpayer’s financial hardship with the State’s right to collect taxes, ensuring that the government can recover dues if the taxpayer fails to comply.

Key Takeaway for Businesses and Tax Professionals

This decision highlights the importance of knowing statutory provisions like Section 80 of the GST Act. Taxpayers unable to clear their GST dues in a single payment can approach the GST Commissioner for instalment facilities rather than waiting for coercive recovery measures. Timely application and strict compliance with payment schedules remain crucial, as defaulting on an instalment triggers immediate recovery of the entire outstanding amount.

Conclusion

The Uttarakhand High Court’s ruling serves as a clear reminder that tax laws provide genuine avenues for relief when businesses face cash-flow challenges. By permitting Suraj Enterprises to apply for instalment payments, the Court has shown how judicial intervention can protect taxpayers from harsh recovery action while upholding the government’s right to collect revenue.