Every registered person is needed to compute his/her tax liability on a monthly basis by setting off the ITC (Input Tax Credit) against the Outward Tax Liability. If there is any tax liability then the same is required to be paid to the government.
These are 3 ledgers that is required to be maintained by every tax payer as prescribed by the government –
- Electronic Tax Liability Ledger
- Electronic Cash Ledger
- Electronic credit ledger
Utilizing Input Tax Credit for the fulfillment of Tax liability:
IGST: After the IGST, ITC is used for payment of IGST then the remaining ITC can be used to pay tax liability under CGST & SGST.
CGST: The CGST ITC cannot be used to pay the SGST liability but can be used to pay the liability under CGST. Further, available CGST credit can be used to pay the IGST liability.
SGST: The SGS ITC cannot be used to pay the CGST liability but can be used to pay the liability under SGST. Further, available SGST credit can be used to pay the IGST liability.
Provision to Pay GST in Installments
If the taxpayer is not able to pay all the GST dues within the stipulated date, then he/she can file an application to the Commissioner requesting to pay in installments.
The Commissioner can extend the due date for tax payment or allow the taxpayer to pay in monthly installments. The reasons for accepting or rejection of such application have to be provided in writing.
When paying in installments, the taxpayers need to keep notes of that:
- Installments are payable every month
- Only a maximum 24 installments are allowed that means the time of payment can be extended for maximum 2 years
- Interest at the rate of18% must be paid along with the installment
- All installments must be paid on time. One single default will lead the installments to cease and the entire outstanding balance will become due on that date. Notice will NOT be issued for this.
Note: This option of paying in installments is NOT available for dues under self-assessment. Any tax under self-assessment need to be paid in one go. Option to pay in monthly installments is available for any liability calculated by the tax authorities during provisional or final assessments, scrutiny, audit etc.
Let us discuss about Pazhayidom Food Ventures (P) LTD. V/S Superintendent Commercial Taxes (Kerala High Court) case. In this case, Kerala HC allows assessee to pay tax in monthly installments due to financial difficulty raised by COVID-19 situation.
Facts Of The Case:
Petitioner is a PVT LTD. company and registered under GST Act, 2017 as a service provider and has admitted Tax arrears for Nov’2018 to March’19 of INR 4 lacs which it intendeds to pay in monthly installment along with the applicable interest and late fees. As the business of the petitioner has been severely affected by the pandemic, it is not in the financial position to pay the arrears of tax.
Respondents contended that there is no such provision under GST law to allow monthly installment of tax payment along with interest & late fees. This would be against the GST provisions.
Kerala High Court Held That:
It only seeks monthly installment of the payment along with the interest which are applicable & late fees, Due to COVID-19 pandemic, the business of the petitioner has come to a total standstill and there is no demand pending against the petitioner as on date. Thus, the High Court has allowed the monthly installment of payment of tax from 25th Aug’2020 to 25th March’2021 along with the applicable interest and late fees. Kerala High Court also stated that if petitioner fails to pay any installment then respondent is allowed to start with the recovery proceedings as prescribed under GST provisions.
Our Views:
If any one of you is looking for such kind of relief, it would now deem fit to file the writ petition rather than going to Authority of Advance rulings(AAR) or Appellate Authority of Advance Ruling (AAAR)as chances of getting such kind of reliefs is higher in High Courts as compared to AAR or AAAR. However, one should not blindly follow this decision to take relief in discharging their tax dues. When considering the implementation of this judgment, there are some practical difficulties for sure. GST Department allows tax dues payment arising out of demand raised to be paid in installments. Neither there is any specific provision prescribed in the GST Act for allowing the payment of tax dues in installments nor the GST portal has provided any facility to pay the dues in installments. Though the petition has been disposed of in favor of the taxpayer, it is not clear how the filing of GST returns will be managed without discharging the complete amount of tax dues.