HC grants SpiceJet relief against recovery proceedings by GST authorities

GST authorities had asked SpiceJet to pay tax liabilities of Rs 80.6 crore and furnish details of properties.

Low-cost airline SpiceJet has been granted relief from the Punjab and Haryana High Court which has asked the GST department to consider and pass an order on the airline’s plea of paying the tax dues in instalments.

GST authorities issued a notice in late July, asking SpiceJet to pay tax liabilities of Rs 80.6 crore and furnish details of movable and immovable properties, warning that they would initiate recovery proceedings if the payment was not made.

SpiceJet did not dispute the tax liability in its petition. The company, however, opposed any recovery proceedings and requested the tax authorities to allow it to pay the dues in 24 instalments, instead of a single payment.

“Having heard the learned counsel appearing for both the parties, we find the prayer of learned senior counsel for the petitioner to be a fair one. Consequently, we dispose of this writ petition with a direction to the Excise and Taxation Commissioner of State Tax, Haryana to decide the representation by passing a speaking order within a period of two weeks from the date of receipt of certified copy of this order,” the court said in its order.

“Since the tax liabilities were never opposed by SpiceJet and it had requested the authorities to pay in instalments due to the unprecedented hit to business because of Covid-19. Since the dues were never opposed by the company and instead more time was sought, to clear the dues, a writ petition was filed opposing recovery proceedings. The court has recognised this and has asked the tax authorities to decide on the company’s request,” said advocate Anuj Dewan, who represented SpiceJet in the case.

The excise and taxation department of Haryana on July 27 sent a show cause notice to SpiceJet saying that the company hadn’t paid tax dues of Rs 80.6 crore which included the period of FY20, FY21 and FY22 (April-June). The department said if the dues were not cleared by 4 August, it would start recovery proceedings against the company.

SpiceJet responded to the show cause notice saying that since the company was facing an acute cash crunch due to the adverse impact of the first and second wave of Covid-19, it be allowed to pay the tax liabilities in 24 equal monthly instalments.

The company also said that it had deposited an amount of Rs 13.6 crore for discharging outstanding liability for the period February 2020 July 2020 and Rs 33.76 crores as GST liability for the period August 2020 to December 2020 had been discharged.

The company had further claimed that it was entitled to get the refund of around Rs 36 crore of IGST paid on re-import of engine and APU and asked GST authorities to adjust the amount against IGST claims. In January, The Customs, Excise and Service Taxes Appellate Tribunal (CESTAT), New Delhi Bench ruled that SpiceJet was entitled to exemption from payment of Integrated Goods and Service Tax (IGST) on re-import of repaired parts or aircraft into India.

SpiceJet reported a stand-alone net loss of nearly Rs 1,000 crore in FY21. For Q1, FY22 it registered a loss at Rs 729 crore. To shore up liquidity, the company has sought shareholders’ nod to raise up to Rs 2,500 crore via issuance of eligible securities through QIP and hive off its cargo business to sell a minority stake in it.