Kalyan Toll Infrastructure Ltd. vs State of Maharashtra and Others

By these six petitions under article 226 of the Constitution, the petitioners have challenged common order dated July 8, 2013, passed by the Maharashtra State Sales Tax Tribunal (hereinafter referred to as "the Tribunal") u/s 26(6) of the Maharashtra Value Added Tax Act, 2002 in respect of stay sought by the petitioners of the orders of assessment and of the first appellate authority. By the above common order the petitioners'' prayer for stay of the assessment order and the order upholding the assessment of the first appellate authority was granted on the condition of depositing 30 per cent of the amounts confirmed. The dispute between the parties in all the petitions is whether bitumen imported into local area for use in BOT (built operate and transfer) project is taxable under the Maharashtra Tax on the Entry of Goods into Local Areas Act, 2002 ("the Entry Tax Act"). According to the Revenue, it is taxable while the petitioners submit that the same is not taxable as bitumen is imported for resale and is exempt from levy u/s 3(5) of the Entry Tax Act. Further, the Revenue in raising the demand has also included the value of bitumen emulsion imported as a part of the import of bitumen for levy of tax. It is the case of the petitioners that bitumen emulsion is a product distinct and different from bitumen and, therefore, cannot be included in the value of bitumen. In support reliance is placed upon the decision of the Madhya Pradesh High Court in the matter of Tiki Enterprises and another Vs. Commissioner of Commercial Tax, M.P., Indore, . Moreover, as bitumen emulsion is not a product specified in the Schedule to the Entry Tax Act, the petitioner submits that no tax can be levied on it.

The Tribunal has by the impugned common order directed the petitioners to deposit 30 per cent of the total dues which includes not only the tax payable but also the equivalent penalty imposed on the petitioners by the assessing officer. The grievance of the petitioner before us is three-fold as under:

(i) The issue is debatable as the same issue had already been raised for determination in an application to the Commissioner of Sales Tax for determination of disputed question. The said application is still pending. In view of the above, the Tribunal ought not to have directed the petitioner to deposit the amount of 30 per cent of the total dues;

(ii) In any event, the issue being debatable, the quantum of penalty imposed by the assessing officer should have been dispensed with completely for grant of stay; and

(iii) Though the issue of financial hardship was raised, the Tribunal has not considered the same in the impugned order. The deposit as directed, according to the petitioner, will lead to collapse of the petitioner''s business and this aspect of financial difficulty has not been taken into consideration in the impugned order while directing deposit of 30 per cent of the total dues.

Mr. Malvankar, the learned counsel for the Revenue, supports the order of the Tribunal. Mr. Malvankar submits that no interference is called for as this is an order passed only on an application made for the stay of the impugned order.

We are informed that the petitioners in the six petitions have already deposited an amount of Rs. 1.60 crores in the aggregate out of the total tax liability of Rs. 14.99 crores (excluding the penalty amount). We find that the Tribunal has while directing the petitioner to deposit 30 per cent of the amounts due has not excluded the penalty amount. In cases where the issue is debatable and warrants a stay, then in such cases normally the penalty amount should not be taken into account for the purposes of deciding the amounts to be deposited. In case while granting stay of the order appealed against the appellate authority is of the view that some amount of penalty should also be deposited, then the order directing deposit must indicate strong reasons prima facie warranting the deposit of penalty at the stage of stay application. Moreover in this case, the Tribunal has not considered the issue of financial hardship pleaded by the petitioner before directing a deposit of 30 per cent of the amount due for staying the order appealed against before the Tribunal. According to us, both these issues are germane to decide the quantum of deposit required to be made by the petitioner for grant of stay of the order impugned before the Tribunal. In the aforesaid circumstances, we set aside the order of the Tribunal dated July 8, 2013 and remit all the six matters to the Tribunal to decide them afresh, keeping in mind the observations made by us. Accordingly, the petitions are disposed of with no order as to costs.