M/S Veteran Security Services vs. The Union Of INDIA And 5 Ors

Held

The Court acknowledged the petitioner's precarious financial condition and the potential consequence of business closure if installments were not allowed. While recognizing the Court's inherent power under Article 226, it noted that statutory provisions generally limit installments to 36. However, considering the circumstances and the agreement of the departmental authorities to extend the installments, the Court decided to invoke its discretionary power. The Court directed the Assistant Commissioner, Guwahati Division-II, to evaluate the total amount due, including interest and penalty, and divide it into 48 equal monthly installments. This monthly amount is to be communicated to the petitioner, who must pay it by the 7th of each month, starting from March 1, 2022. The Court stipulated that non-compliance with this payment schedule would lead to the revival of the cancellation order. The Court also clarified that if installments are paid regularly, the cancellation order would have no effect, subject to any future default.

Facts

M/s Veteran Security Services, a partnership firm providing security services, is registered under the GST Act, 2017. The petitioner defaulted in paying GST dues amounting to Rs. 2,58,30,801/- for the period March 2018 to November 2020, along with applicable interest and penalty. Consequently, the Superintendent, Central Goods and Service Tax, Guwahati-C-5, issued an order cancelling the petitioner's registration on January 19, 2021, under Section 29 of the CGST Act, 2017. The petitioner's application for revocation of this cancellation was rejected by an order dated May 18, 2021. Aggrieved, the petitioner filed a writ petition before the Gauhati High Court, seeking to pay the defaulted amount in installments due to financial difficulties.

Key Issues

1. Whether the Court, in exercise of its discretionary power under Article 226 of the Constitution of India, can allow the petitioner to pay the outstanding GST dues, including interest and penalty, in 48 monthly installments, notwithstanding the maximum limit of 36 installments prescribed by the departmental circular? The petitioner argued that due to their precarious financial condition, they are unable to pay the entire defaulted amount in one go. They relied on Circular No. 996/3/2015-CX dated 28.02.2015, which allows for payment of arrears in installments, with Commissioners empowered up to 24 installments and Chief Commissioners up to 36 installments. The petitioner sought an extension beyond 36 installments, invoking the Court's inherent power. The revenue, represented by the Standing Counsel for GST, initially raised an apprehension regarding the petitioner's past conduct, suggesting it was not confidence-inspiring. However, the departmental authorities ultimately agreed to consider extending the permissible installments up to 48.