Page 58 - GSTL_30th April 2020_Vol 35_Part 5

544 GST LAW TIMES [ Vol. 35
lighted the need and necessity to allow it to pay the dues in installments. There-
fore, in a case where the assessee admits to the service tax dues as specified in the
show cause notice or in the garnishee notice, no adjudication would be neces-
sary. To that extent, decision of the Karnataka High Court in Prashanthi (supra),
is distinguishable on facts.
23. Before dealing with the prayer of the petitioner for payment of ser-
vice tax dues in installments, it would be apposite to first deal with the question
of interest. As already noticed above, Section 75 of the Finance Act, 1994, deals
with levy of interest on delayed payment of service tax. It provides for payment
of simple interest at such rate not below 10% and not exceeding 36% per annum
for the period of delay. It is thus clear that the interest that may be imposed in
case of delayed payment of service tax is not a fixed percentage but ranges be-
tween 10% to 36% indicating an element of flexibility. What would be the interest
in a particular case would depend upon the facts and circumstances of that case
for which discretion is vested on the competent officer. Such discretion perforce
has to be exercised in a fair and judicious manner and cannot be exercised me-
chanically to levy the maximum rate of interest. In the instant case, what is seen
is that respondent No. 2 has imposed the maximum percentage of interest i.e.,
36% without any exercise of discretion which indicates non-application of mind.
Thus, the exercise is arbitrary.
24. That brings us to the last issue that is payment of service tax dues in
installments. In this connection, reference may be made to circular dated 28-2-
2015, issued by the Government of India, Ministry of Finance, Department of
Revenue, Central Board of Excise and Customs, which deals with recovery of
arrears in installments and amendment of garnishee notice. It has been clarified
that the recovery officer has the power to add, amend, vary or rescind any gar-
nishee notice issued, however, safeguarding the interest of the revenue. Regard-
ing payment of arrears in installments, it has also been clarified that the Central
Board of Excise and Customs has allowed recovery of arrears of taxes, interest
and penalty in installments. As per the said circular, Commissioners have been
given the discretion for granting sanction to pay arrears in installments up to a
maximum of 24 monthly installments and Chief Commissioners more than 24
and up to a maximum of 36 monthly installments. It has been emphasized that
approval to pay in installments and the number of installments should be fixed
in such a way so that an appropriate balance is maintained between recovery of
arrears and survival of business.
25. After thorough consideration of the entire matter and taking an
overall view, the following orders/directions are issued :-
(1) The interest portion covered by the garnishee notices is set aside.
(2) In so far payment of interest is concerned, matter is remanded to re-
spondent No. 2 who shall take an appropriate decision regarding
the percentage of interest that may be levied after giving an oppor-
tunity of hearing to the petitioner.
(3) Regarding the arrear service tax dues de hors the interest amount,
the same shall be paid by the petitioner in 48 equated monthly in-
stallments, commencing from 15-9-2019.
26. With the above order and directions, writ petition is disposed of.
No costs.
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