2017 (12) TMI 1582 - HC - VAT and Sales Tax

Rejection of Stay application - The petitioner claimed that it had already made pre-deposit of 25% of the disputed tax before the Tribunal. If during the pendency of the said appeal the balance disputed tax is recovered in its entirety the petitioner may suffer serious prejudice - Held that - In order to balance the interests of both the parties the respondents are restrained from recovering the balance disputed tax subject to the petitioner paying 50% of the disputed tax within a period of four weeks from today pending Tax Appeal - While calculating 50% of the disputed tax the pre-deposit if any made by the petitioner shall be given credit to - petition disposed off.

Summary

Issues:
Petitioner's plea for mandamus to declare order rejecting stay application as arbitrary and illegal, to set aside previous order, and to restrain tax collection pending appeal.

Analysis:
The petitioner, a private limited company, entered into a development agreement and opted to pay composition tax under relevant laws. Respondent authorities passed assessment and revision orders, leading to the petitioner filing an appeal before the Tribunal. The petitioner requested a stay on recovering the disputed tax balance, which was denied by respondent No.1 through an order dated 29.11.2017.

The petitioner argued, citing legal precedents, that it should not be liable to deduct tax at source for payments to its sub-contractor since it had already discharged its tax liability. On the other hand, the respondents contended that the legality of the revision order was under consideration in the pending appeal and that the petitioner should pay the tax pending the appeal process.

Considering the serious dispute regarding the petitioner's liability to pay tax under the revised assessment order, the court balanced the interests of both parties. It directed that the respondents are restrained from recovering the balance disputed tax if the petitioner pays 50% of the disputed tax within four weeks, taking into account any pre-deposit made by the petitioner. The court disposed of the writ petition based on these directions, ensuring fairness to both parties.

Additionally, a related interim relief petition filed by the petitioner was deemed infructuous following the disposal of the main writ petition.