Understanding GST Instalments: A Taxpayer's Guide to Section 80

Overview

Section 80 of the Central Goods and Services Tax (CGST) Act, 2017, provides a mechanism for taxpayers to pay tax dues, including interest, penalty, or any other amount, in instalments upon written application and subject to conditions specified by the Commissioner.

Key Provisions of Section 80

• Title: Payment of Tax and Other Amounts in Instalments

• Objective: To provide relief to taxpayers facing financial hardship by allowing payment of due amounts in instalments.

• Applicability: Tax, interest, penalty, fee or any other amount due under the GST law.

Statutory Extract

Section 80 - Payment of tax and other amount in instalments

On an application filed by a taxable person, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act, other than the amount due as per the liability self-assessed in any return, by such person in such monthly instalments, not exceeding twenty-four, as he may consider fit. However, such extension may be subject to payment of interest as provided under section 50 and subject to such conditions and limitations as may be prescribed.

• Amount Covered: Any tax, interest, penalty, fee, or other amount due except self-assessed liability in returns.

• Maximum Number of Instalments: Up to 24 monthly instalments.

• Interest: Interest under Section 50 applies for the extended period.

• Discretionary Power: The Commissioner has the discretion to grant or deny instalments, subject to written reasons.

• Application Process: Taxpayer must apply in writing, stating reasons.

• Conditions/Limitations: As may be prescribed under rules.

Summary of Procedure (As per Rule 158 of CGST Rules, 2017)

Exceptions and Limitations

• Self-assessed Tax Liability Excluded: Amount declared in the GST return (e.g., GSTR-3B) but not paid, is NOT eligible for payment in instalments under Section 80.

• Discretionary: The grant of instalments is not a right but a discretion exercised by the Commissioner.

• Breach of Condition: Default in payment of any single instalment results in revocation of the facility and immediate recovery of full balance.

Relevant GST Rules

Rule 158 - Payment of Tax and Other Amount in Instalments

• Prescribes: The procedural aspects and forms for applying for payment in instalments.

• Details: Application in prescribed form, conditions for grant, power to reject application, and consequences of default.

Main Points

Facility for payment of dues in installments upon written application to Commissioner.

• Up to 24 monthly installments can be allowed.

• Not applicable to self-assessed tax liability in returns.

• Interest under section 50 is applicable for the extended period.

• Conditions and discretionary approval apply.

• Default in an instalment leads to withdrawal of this benefit and immediate demand of balance.

Practical Implications

• Relief to Taxpayers: Offers temporary financial relief via staggered payment of large tax demands.

• Strict Compliance: Timely payments as per granted instalments are essential to avoid revocation of relief.

• Not for All Dues: Cannot be availed for self-assessed but unpaid amounts in returns.

Case Law Reference

Veteran Facility Management Services Pvt. Ltd. vs Union of India - Gauhati High Court (2024) 14 CENTAX 153 

Considering assessee's precarious financial condition, assessee was allowed to pay its tax arrears in 48 monthly installments; during continuance of payment of installments, order of cancellation of registration would have no effect.

Note: Law says maximum 24 instalments but High Court have the power to increase them.

Conclusion

Section 80 of the CGST Act empowers the Commissioner to allow payment of certain tax dues (excluding self-assessed returns) in up to 24 monthly instalments, subject to interest under Section 50, conditions, and the consequences of default. This provision is discretionary and aims to ease financial stress for genuine taxpayers while ensuring revenue recovery.