Inter-governmental tax disputes should first go to a senior committee, with recovery stayed until administrative resolution.

Inter-governmental sales tax disputes should, where feasible, be first examined by a senior-level administrative committee before court proceedings. Applying that principle, the HC directed constitution of a committee under the Chief Secretary of Rajasthan to hear both sides, consider the assessment and recovery controversy over supplies for defence works, and record a reasoned decision within a fixed time if no amicable resolution emerged. Coercive recovery was to remain in abeyance until the committee decided the matter, reflecting the Court's emphasis on avoiding unnecessary litigation and public expenditure.

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Issues: Whether the dispute between the Union of India and the State of Rajasthan regarding sales tax assessment and recovery should first be placed before a committee of senior officers for resolution, and whether coercive recovery should be kept in abeyance till such decision.

Analysis: The dispute arose from assessment orders concerning supply of construction materials for defence works and the applicability of sales tax. Instead of adjudicating the merits, the Court applied the principle that inter se disputes between governmental authorities should ordinarily be examined at the governmental level before resorting to litigation. Relying on the need to avoid avoidable public expenditure and unnecessary litigation, the Court directed constitution of a committee of senior officers under the Chief Secretary of the State of Rajasthan to hear both sides, consider the dispute within a fixed time, and record a reasoned decision if the matter could not be resolved amicably. The Court also expected that no recovery steps would be taken until the committee decided the matter.

Conclusion: The dispute was referred to the committee mechanism for prior resolution, and recovery of the assessed tax was directed to remain in abeyance until final decision by the committee.

Final Conclusion: The petitions were disposed of by directing a pre-litigation administrative resolution process for the inter-governmental tax dispute, with interim protection against recovery pending that process.

Ratio Decidendi: Disputes between governmental authorities should, where feasible, be first examined and attempted to be resolved through a senior-level committee before invoking court proceedings, and coercive recovery may be deferred pending such consideration.

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