Indo Burma Petroleum Co. Ltd. and Another vs Collector of Motor Spirit Sales Tax

M.S. Sanklecha, J.—This petition under article 226 of the Constitution of India challenges the order dated August 28, 2012 of the Maharashtra Sales Tax Tribunal ("the Tribunal") to the extent it has granted a stay of the order dated April 4, 2012 of the Collector of Motor Spirit Sales Tax, Maharashtra ("the Collector") subject to a payment of Rs. 8 lacs. Brief facts are as under:

(a) Petitioner No. 1 is a public sector undertaking under the Ministry of Petroleum, New Delhi, engaged in the business of buying and selling petroleum products. Petitioner No. 1 is, inter alia, registered under the Bombay Sales of Motor Spirit Taxation Act, 1958 ("the Act").

(b) For the year 1989-90, the petitioner had submitted its statement for payment of tax under the Act. In its return the petitioner had claimed exemption from tax in respect of sales of high speed diesel (HSD) made to fishermen Co. operative societies under notification dated April 24, 1974 as amended on March 5, 1975 issued u/s 7A of the Act. However, the assessing officer by order dated March 24, 1998 disallowed the claim for exemption and issued a demand for Rs. 30.80 lacs as tax.

(c) Being aggrieved by the assessment order dated March 24, 1998, petitioner No. 1 filed an appeal u/s 16 of the Act before the Assistant Collector (Appeals) of Motor Spirit Sales Tax. Petitioner No. 1 had deposited on amount of Rs. 5.16 lacs prior to the hearing of its appeal. On January 27, 2003, the Assistant Collector of Sales Tax (Appeals) dismissed the appeal of petitioner No. 1.

(d) Being aggrieved by the order in appeal dated January 27, 2003 petitioner No. 1 filed a revision application under the Act before the Collector of Motor Spirit Sales Tax (the Collector). However, the Collector after hearing the petitioner by order dated April 4, 2012 dismissed the revision application and upheld the order of the authorities below that tax payable is Rs. 30.80 lacs for the assessment year 1989-90.

(e) Being aggrieved by the order dated April 4, 2012, petitioner No. 1 carried the matter in revision to the Tribunal. Before the Tribunal, the petitioner also filed an application for stay of the recovery of tax pending the disposal of the revision application. The Tribunal by its order dated August 28, 2012 after holding that there is no requirement of pre-deposit under the Act granted stay of the order dated April 4, 2012 of the Collector till the disposal of the revision application on payment of 30 per cent of the amount due, i.e., of Rs. 8 lacs. On merits the Tribunal held that A forms submitted by the fishermen society for the purposes of claiming the benefit of exemption was not complete and thus the exemption was not available. The Tribunal also held that the issue arising before it was a debatable issue.

Mr. P.V. Surte, learned counsel, in support of the petition submits:

(a) that u/s 17 of the Act, there was no requirement of pre-deposit as required u/s 16 of the Act. Therefore, the deposit of Rs. 8 lacs for the purposes of staying the order dated April 4, 2012 of the Collector was uncalled for;

(b) having held that the issue before it is debatable and there has been a gross delay in passing the assessment order for the year 1989-90 an unconditional stay ought to have been granted;

(c) On merits, he submits that the petitioner have a strong case as they have acted upon the A form furnished to them by the fishermen society which was later found defective, then u/s 7(2) of the Act the authorities under the Act are obliged to proceed against the fishermen society. In view of the above, he submits that the order of the Tribunal be modified and the request of paying Rs. 8 lacs for stay of the order dated April 4, 2012 of the Collector be dispensed with and an unconditional stay be ordered.

As against the above, Mr. Nair appearing for the respondent submits that no interference is called for in respect of the impugned order dated August 28, 2012 of the Tribunal. The petitioner is not entitled to the benefit of exemption in respect of sales/supplies of HSD made to fishermen society as society did not hold a licence under the Act. In support, reliance was placed upon the decision of the Tribunal dated July 19, 2010 in Revision Application No. 20 of 2008 in the matter of India Oil Corporation ltd. v. State of Maharashtra where also the exemption to supply made to fishermen Co.op. society was denied for failure to submit A forms.

We have considered the submissions. We find that the petitioner is Government of India undertaking and therefore it is safe to proceed on a prima facie view that there would be no intent on the part of the petitioner to defraud the revenue. The exemption is being denied in respect of sales/supply of HSD made to fishermen society on the ground that the societies were not holding a licence under the Act. However, there is no allegation in the proceeding of any collusion between fishermen Co.op. societies and the petitioners. Therefore, prima facie it appears that the remedy u/s 7A(2) of the Act would be available against the fishermen''s societies for the breach, if any. The Tribunal itself records in its order dated August 28, 2012 that the issue arising before them is debatable. Further, we find that the petitioner for the year 1989-90 had paid an amount of Rs. 8.73 crores as tax under the Act. In light of the above the disputed amount of Rs. 30.80 lacs is relatively a amount and the stay could be granted without any condition of part payment. One more factor to be borne in mind is that for 14 years, i.e., after the assessment order dated March 24, 1998 the dispute has not yet been resolved finally. The order of the Tribunal in the Revision Application No. 20 of 2008 in the matter of India Oil Corporation (Revision Application No. 20 of 2008 decided on dated July 19, 2010) relied upon by the Revenue is distinguishable as no A forms were submitted in that case.

In view of the above, it would be in the interest of justice if the Tribunal hears the revision application filed by the petitioner expeditiously. In the meantime, the stay of the order dated April 4, 2012 granted by the Tribunal would continue till the disposal of the revision application without the requirement of making a payment of Rs. 8 lacs as the condition for the stay. The petition is disposed of in above terms. No order as to costs.