M.Bagulayan vs. The Superintendent Central

Facts

The petitioner, M. Bagulayan, challenged a demand notice (O.C.No.975/2017, dated 20.12.2017) issued by the Superintendent of Central GST & Central Excise, Rajapalayam. The demand pertained to interest tax. The petitioner had accepted and paid the principal tax amount. However, a further amount of Rs. 3,48,735/- was due as interest. The petitioner had already paid 25% of this interest amount, leaving a balance of Rs. 2,61,535/-. The writ petition was filed seeking to quash the demand notice. The matter was taken up for final disposal with the consent of both parties.

Held

The Court disposed of the writ petition by allowing the petitioner to remit the balance interest amount of Rs. 2,61,535/- in five equal monthly installments. The first installment was to commence from February 1, 2018. The Court did not quash the demand notice but facilitated a payment plan for the outstanding interest. The reasoning appears to be based on the consent of both parties and the petitioner's willingness to clear the dues, albeit in installments. The ratio decidendi is that High Courts, under Article 226, can facilitate payment arrangements for tax dues when parties consent, especially when the principal tax has been paid and the petitioner is seeking to clear interest liabilities.

Key Issues

1. Whether the demand notice issued by the respondent for interest tax is liable to be quashed, considering the petitioner has already paid the principal tax amount and is seeking to pay the interest in installments? (Question of law and fact, concerning the interpretation and application of GST provisions related to interest on delayed payment). Contentions: Petitioner's Argument: The petitioner argued that they had already paid 25% of the outstanding interest amount and sought permission to remit the balance in five equal monthly installments, commencing from February 1, 2018. The implication is that the demand notice itself should not be quashed but the payment terms should be regularized. Respondent's Argument: The respondent, the Superintendent of Central GST & Central Excise, did not explicitly record any arguments against the petitioner's plea for installment payments. The judgment indicates a consent to the proposed arrangement.