GST Payment in Installments

Numerous businesses have been hit hard since the start of the Covid-19 pandemic in India. Many had to shut down, while many are still battling to clear their liabilities including GST liabilities. Businesses neglected to clear their GST dues because of the effect of the pandemic, which leads to us a question of whether or not GST can be paid in installments. So, in this blog, we will discuss the concept of GST payment in installments. 

Provision of GST Payment in Instalments 

If a taxpayer is not able to make a GST payment within the stipulated time. Then, in this case, he/she can request the commissioner and make GST payment in installments. However, he/she needs to mention the reasons for non-payment of GST liability in such an application.  

GST Payment in Instalments: Points to Note 

Here are the certain points that shall be kept in mind by the taxpayer at the time of making GST payment in installments: 

1. Maximum 24 installments are permitted, in other words, the time limit to pay the GST dues in installments can be extended to a maximum of 2 years. 
2. Installments shall be paid every month, without fail and on time; 
3. The taxpayer needs to pay the GST payment in installments along with the interest at the rate of 18%; 
4. In case if a single installment defaults, the taxpayer needs to pay the GST liability will due on that date. In other words, the GST payment in installments provision will cease in case of default. Moreover, no notices will be served by the authorities for such failure of installment. 

GST Payment in Instalments: Case Law 

PAZHAYIDOM Food Ventures Pvt. Ltd VS Superintendent Commercial Taxes 

Case Fact 

PAZHAYIDOM Food Ventures Pvt. Ltd (the petitioner) registered as a service provider under the GST Act, 2017. They admitted GST dues for the period of November 2018 – March 2019 of INR 4 lakhs was not paid. Later, they were asked to make GST payments in installments together with interest and late fees. Keeping the fact in mind that the petitioner business was affected due to the Covid-19 pandemic. Due to which the petitioner was not able to make the GST payment within the prescribed time frame.  

Respondents Argument 

Superintendent Commercial taxes (the respondent) argued that there is no such law or provision under GST where the petitioner can make GST payments in installments. Furthermore, the respondent also argued that allowing GST payment in installments would be against the GST laws and provisions. Hence, the relief sought by the petitioner to make GST payments in installments cannot be granted. 

The Ruling of High Court 

The Kerala High Court permitted the GST payment in installments by stating that the petitioner’s business has suffered due to the COVID-19 pandemic. Moreover, there are no other proceedings pending against the petitioner as of date. As per the ruling, the petitioner needs to make a GST payment in installment from 25th August to 25th March 2021 together with interest and late fees. However, in case of any defaults, the respondent can start with the recovery provisions available under GST.