Hindustan Petroleum Corporation Limited vs Assistant Commissioner of Commercial Taxes (Assessment I), Special Circle II, Commercial Taxes, Ernakulam and Others

C. K. Abdul Rehim J.

The petitioner is a public sector undertaking owned by the Union of India. Challenge is against exhibits PI and P1(a) prohibitory orders issued by the third respondent to fourth respondent-bank, directing to realise a huge amount of Rs. 12,73,21,702 from the account maintained by the petitioner-company, which is allegedly due towards arrears of tax assessed under the Kerala General Sales Tax Act and Central Sales Tax Act. 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. It is also pointed out that exhibits PI and PI (a) do not disclose any details regarding the arrears under demand. It is pointed out that from the reference cited in PI and PI (a) it is revealed that the recovery is with respect to assessment finalised for the years 2003-04, 2004-05 and 2001-02. Learned counsel for the petitioner points out that, with respect to KGST assessment for the years 2003-04 and 2004-05, appeals are pending before the Deputy Commissioner and the appellate authority had issued conditional stay order insisting payment of 60 per cent. The petitioner had challenged the said order before this court in W.P. (C) No. 33489 of 2010, in which copy of the judgment is yet to be received. With respect to Kerala general sales tax and Central sales tax assessments for the year 2001-02, another writ petition is pending before this court as W. P (C) No. 35483 of 2010, is the contention. It is further stated that, Central sales tax assessment with respect to years 2003-04 and 2004-05 are also under appeal and the appellate authority had already heard the appeals on March 28, 2010, and the matter now stands adjourned to the month of April, 2012. The contention of the petitioner is that the statutory forms required for establishing the claim for concessional rate of tax has already been produced in those cases, and there is a likelihood of allowing the appeals. Considering the pendency of the writ petition and the statutory appeals as mentioned above, the coercive steps of recovery now initiated cannot be justified, is the contention.

Heard learned Special Government Pleader (Taxes) on behalf of the respondents. It is contended that with respect to the Kerala general sales tax assessments for the years 2003-04 and 2004-05, which is now pending in appeal before the appellate authority, the petitioner had failed to comply with the condition stipulated for payment of 60 per cent. Further this court has not modified the said order in W. P (C) No. 33489 of 2010 and hence the authority was justified in initiating coercive steps of recovery. With respect to assessments under the Kerala General Sales Tax Act and Central Sales Tax Act for the year 2001-02 there is no stay granted by this court and the petitioner had not complied with the condition stipulated in the interim order issued by the appellate authority. It is also contended that there is no stay granted by the appellate authority with respect to assessment under the Central Sales Tax Act for the years 2003-04 and 2004-05. Under the above circumstances the amounts demanded under exhibits PI and PI (a) are amounts legally due and the prohibitory orders are issued only on the basis of the revenue recovery steps initiated earlier. Learned Government Pleader also submitted that, inspite of raising contentions regarding eligibility for payment of tax at the concessional rate, the petitioner had failed to produce the requisite statutory forms and a large number of forms produced by the company are defective. Hence the contentions of the company against the assessment cannot be accepted. Since huge amount is due from the petitioner-company, the coercive steps of recovery initiated through the prohibitory orders is perfectly justified especially in view of the closing of financial year during which the State Government has to augment maximum revenue collection, is the submission.

While considering the issue I notice that W. P (C) No. 33489 of 2010 was disposed of by this court on today, imposing condition for payment of 25 per cent of amount due, till the disposal of the appeals, within two weeks from today. With respect to year 2001-02 Kerala general sales tax and Central sales tax assessment are under appeal. Regarding condition imposed by the appellate authority, the honourable Supreme Court had issued directions to this court to decide the question regarding imposition of conditions while granting stay, as per its decision in Bharat Petroleum Corp. Ltd. v. Commissioner of Sales Tax [2008] 17 VST 162 (SC). 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.

Under the above-mentioned circumstances I am of the view that the prohibitory orders issued under exhibits PI and P1(a) cannot be fully sustained. However, 1 am of the view that necessary conditions need be imposed for restraining recovery of the various amounts under demand. As observed above with respect to KGST for the years 2003-04 and 2004-05 this court had already imposed condition through W. P (Q No. 33489 of 2010. The Kerala general sales tax and Central sales tax assessments for the year 2001-02 is a matter which is pending disposal before this court in W. P (Q No. 35348 of 2010(P). So also the Central sales tax assessment for the years 2003-04 and 2004-05 are pending before the appellate authority in which there is no stay granted by the appellate authority. Therefore, the writ petition is disposed of directing the respondents to keep in abeyance the recovery steps initiated pursuant to exhibits PI and PI (a), till the disposal of W. P (C) No. 35458 of 2010 by this court and till the disposal of the appeals pending before the appellate authority with respect to Central sales tax assessment for the years 2003-04 and 2004-05, 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 for the year 2001-02 and Central sales tax assessment for the years 2003-04 and 2004-05, on or before March 31, 2012.