2015 (3) TMI 696 - HC - VAT and Sales Tax

Levy of surcharge - whether if tax is not leviable, could the Revenue recover a surcharge and which is stated to be nothing but a levy on the tax as claimed. - Held that - In the given facts and peculiar to this public sector unit, the Tribunal would have been justified in granting an unconditional stay of recovery of taxes/surcharge pending the disposal of the Revision Applications and Appeals, but by calling upon the Petitioner to furnish an undertaking that in the event the final orders are adverse to them, subject to their legal rights, they would deposit the sums as demanded and confirmed by the Revisional/Appellate Authority. - Writ Petition is disposed of by substituting the order and direction of the Appellate/Revisional Court and instead of deposit of monetary sums in terms of the operative order, there would be an unconditional stay of recovery of the taxes pending the disposal of the Second Appeals and Revision Applications. However, the Petitioner shall give an undertaking to this Court that in the event the final orders are adverse to their interest and the demands are confirmed either fully or in part, then, they would deposit, subject to their rights, the sum together with interest, surcharge, if any, within a period of 12 weeks from the date of communication of the order. Upon such an undertaking being filed within a period of 15 days from today in this Court, there shall be stay of the recovery in terms of our directions above. - The Revisional and Appellate Authority also shall endeavor to dispose of the Appeals expeditiously and if the Petitioner does not cooperate with the Tribunal in that regard, it would be open for the Tribunal to issue appropriate direction including making a report to this Court. It would be open for the Revenue to bring to this Court's notice any tactics, which may be adopted to stall the proceedings or to delay the disposal of the Revision Applications and Second Appeals, before the Tribunal. These additional directions are issued because of the apprehension of Mr. Sharma that in other matters when coercive steps were initiated, no recovery was possible. - Petition disposed of.

Summary

Issues:
1) Challenge to an order on stay applications in a Writ Petition under Article 226 of the Constitution of India.
2) Interpretation of the Motor Spirit Tax Act and Rules regarding the levy of surcharge on motor spirit sales.
3) Tribunal's directions for depositing sums to secure tax demands.
4) Consideration of unconditional stay of tax recovery pending disposal of appeals.
5) Undertaking required from the Petitioner in case of adverse final orders.
6) Directions for expeditious disposal of appeals and consequences of non-cooperation.

Analysis:
1) The Writ Petition challenges an order on stay applications under Article 226 of the Constitution of India. The Petitioner, a public sector undertaking dealing with motor spirit and petroleum products, contests the levy of surcharge under the Motor Spirit Tax Act. The dispute pertains to the recoverability and levy of Motor Spirit Tax for specific periods.

2) The controversy revolves around whether the surcharge is recoverable if the tax is not leviable, as per the Motor Spirit Tax Act and related Rules. The Petitioner argues that if exempt from paying tax, the surcharge, being on the tax leviable, should not be recoverable. This issue is pending before the Tribunal in Revision Applications and Second Appeals.

3) The Tribunal directed the Petitioner to deposit substantial sums to secure tax demands totaling crores. However, the High Court, after considering the contentions, decided to grant an unconditional stay of tax recovery pending the disposal of the appeals. The Petitioner was required to provide an undertaking to deposit the sums if final orders were adverse.

4) The High Court emphasized that the matter involves a pure interpretation of legal provisions and refrained from expressing opinions on the merits. It directed an unconditional stay of tax recovery but mandated the Petitioner to furnish an undertaking for potential future deposits if required. The Court considered the nature of the Petitioner as a public sector unit in this decision.

5) The Court ordered the Petitioner to provide an undertaking to deposit sums if final orders were against them, within a specified timeline. It also instructed the Revisional and Appellate Authority to expedite the disposal of appeals and warned against non-cooperation, allowing for appropriate actions in such cases.

6) The Writ Petition was disposed of without costs, clarifying that no opinion was expressed on the rival contentions, leaving the Tribunal to consider them on their own merits and in accordance with the law. The Court's directions aimed at ensuring a fair process and timely resolution of the legal dispute.