2014 (4) TMI 757 - SC - VAT and Sales Tax

Pre-deposit - Stay of Judgment & Order - A.P. Tax on Entry of Goods into Local Areas Act, 2001 - Correctness of the common judgment and order passed by the High Court - Constitutional validity of the A.P. Tax on Entry of Goods into Local Areas Act, 2001 - Interim relief - Held That - The operation of the impugned judgment and order is stayed subject to the appellants depositing 50% of the accrued tax liability/arrears and furnish bank guarantee for the balance amount The deposit shall be made after adjusting the amount(s) paid or deposited during the pendency of the Writ Petition before the High Court Decided in Favour of assessee.

Summary

Issues:
Challenge to constitutional validity of A.P. Tax on Entry of Goods into Local Areas Act, 2001

Analysis:
The Supreme Court granted leave in a Civil Appeal where the appellants contested the judgment of the High Court of Andhra Pradesh regarding the constitutional validity of the A.P. Tax on Entry of Goods into Local Areas Act, 2001. The Court, after hearing both parties, decided not to provide a blanket stay order as requested by the appellants. Instead, the Court ordered that the operation of the impugned judgment and order be stayed on the condition that the appellants deposit 50% of the accrued tax liability/arrears under the Act and furnish a bank guarantee for the remaining amount within four weeks. The appellants were directed to maintain the bank guarantee(s) during the appeal process. Any deposited amount or bank guarantee was made subject to the final outcome of the appeal.

Furthermore, the Court instructed the appellants to deposit 50% of the tax liability/arrears, including interest and penalty, and provide a bank guarantee for any outstanding amount upon receiving demand notices under the Act for the past period. Failure to comply with these directives would result in the automatic vacation of the interim orders granted by the Court. The judgment also outlined the refund process in case the State of Andhra Pradesh lost the matter, requiring them to refund the deposited amount with interest determined by the Court. Conversely, if the appellants lost the case, the Department had the right to encash the bank guarantee(s) and demand interest and penalties on the outstanding tax arrears.

Additionally, the appellants were mandated to continue paying taxes at prevailing rates for future periods. The Court emphasized that the Department should refrain from coercive recovery measures due to the interim order. It allowed the appellants to seek statutory remedies against assessment orders or appeals and directed the statutory authorities to handle such appeals in accordance with the law. The judgment also granted the State of Andhra Pradesh the liberty to verify if the tax burden had been passed on to consumers and file applications for modification of interim orders if necessary.

In conclusion, the Court disposed of the relevant application and provided detailed instructions and conditions for the appellants, the State of Andhra Pradesh, and the Department regarding the tax liability under the A.P. Act, 2001.