2012 (11) TMI 170 - HC - VAT and Sales Tax

Arrears of tax assessed under the Kerala General Sales Tax Act and Central Sales Tax Act (CST) - According to the petitioner, before issuing the prohibitory orders the petitioner was not given any notice nor there was any information to the petitioner about the coercive steps of recovery Held that - The matter is pending disposal before this court and arguments were already heard. Regarding arrears pertaining to Central sales tax assessment for the year 2003-04 and 2004-05 contention of the petitioner is that the statutory appeals stands already heard by the appellate authority and the matter is now in seizing of the appellate authority. The respondents (revenue) directed to keep in abeyance the recovery steps initiated subject to condition of the petitioner remitting 15 per cent of the amount under demand with respect to assessment under the Kerala General Sales Tax Act and the Central Sales Tax Act

Summary

Issues:
Challenge against prohibitory orders for recovery of tax arrears under Kerala General Sales Tax Act and Central Sales Tax Act without proper notice or information.

Analysis:
The petitioner, a public sector undertaking, challenged the prohibitory orders issued by the third respondent to the fourth respondent-bank for recovering a substantial amount due under the Kerala General Sales Tax Act and Central Sales Tax Act. The petitioner argued that no prior notice was given, and the orders lacked details about the arrears. The petitioner highlighted pending appeals and writ petitions for various assessment years, indicating a likelihood of success in those cases. The petitioner contended that the recovery steps initiated were premature given the unresolved legal proceedings.

The respondents argued that the petitioner had not complied with payment conditions for pending appeals and writ petitions, justifying the coercive recovery steps. They emphasized that no stays were granted for the assessments in question, and the amounts demanded were legally due. The respondents also criticized the petitioner for failing to produce required statutory forms and submitting defective forms, undermining their contentions against the assessments.

The court noted the ongoing legal proceedings and recent orders imposing payment conditions. Acknowledging the complexity of the case, the court found that the prohibitory orders could not be fully upheld. However, the court deemed it necessary to impose conditions to restrain recovery efforts. Referring to specific cases and pending appeals, the court directed the respondents to halt the recovery steps until the resolution of the pending legal matters. The court mandated the petitioner to remit a percentage of the amount under demand by a specified date to maintain the stay on recovery actions.