2012 (12) TMI 964 - HC - VAT and Sales Tax

Stay of order - exemption denied in respect of sales/ supply of HSD made to fishermen society on the ground that the societies were not holding a licence under the Act - Held that - Prima facie it appears that the remedy under section 7A(2) of the Act would be available against the fishermen s societies for the breach, if any. The Tribunal itself records in its order dated August 28, 2012 that the issue arising before them is debatable. Further,find that the petitioner for the year 1989-90 had paid an amount of ₹ 8.73 crores as tax under the Act. In light of the above the disputed amount of ₹ 30.80 lacs is relatively a amount and the stay could be granted without any condition of part payment. Matter to be concluded expeditiously.

Issues:
Challenge to stay order granted by Maharashtra Sales Tax Tribunal. Interpretation of exemption claim for sales of high speed diesel to fishermen Co-operative societies under Bombay Sales of Motor Spirit Taxation Act, 1958. Requirement of pre-deposit under section 16 of the Act. Debatable issue determination. Prima facie view on intent to defraud revenue. Allegation of collusion between societies and petitioner. Disputed tax amount and duration of unresolved dispute.

Analysis:
The judgment of the Bombay High Court in this case involved a challenge to a stay order granted by the Maharashtra Sales Tax Tribunal. The petitioner, a government undertaking engaged in the business of buying and selling petroleum products, had claimed exemption from tax for sales of high speed diesel to fishermen Co-operative societies under the Bombay Sales of Motor Spirit Taxation Act, 1958. The assessing officer disallowed the exemption claim, leading to a demand for tax payment. The petitioner appealed the decision, but subsequent appeals and revision applications upheld the tax liability. The Tribunal granted a stay of the tax recovery pending the revision application, requiring a payment of Rs. 8 lacs, citing incomplete A forms submitted by the societies for exemption.

The petitioner challenged the stay order, arguing that there was no requirement of pre-deposit under section 16 of the Act and that the issue was debatable. They contended that an unconditional stay should have been granted due to the delay in passing the assessment order. Additionally, they asserted that they had acted in good faith based on defective A forms provided by the societies, shifting liability to the societies under section 7(2) of the Act. On the other hand, the respondent opposed any interference with the Tribunal's order, claiming that the societies did not hold a license under the Act, thus denying the exemption.

The High Court considered the submissions and observed that as a government undertaking, the petitioner likely had no intent to defraud the revenue. They noted the absence of collusion between the societies and the petitioner, indicating that the remedy under the Act could be pursued against the societies. The Court found the issue debatable and highlighted the significant tax amount paid by the petitioner for the year in question. Given the prolonged dispute resolution period and the absence of A form submission in a prior case, the Court concluded that an unconditional stay without the Rs. 8 lacs condition would be just. The Court directed the Tribunal to expedite the revision application hearing while allowing the stay of the tax recovery to continue without the payment condition. The petition was disposed of accordingly, with no order as to costs.

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