Sovereign toll collection not taxable as business auxiliary service; full interim waiver and recovery stay granted.

Collection of toll tax on behalf of a municipal corporation was treated as a sovereign function, not a commercial activity, so it did not fall within business auxiliary service. On that basis, the applicant established a strong prima facie case for interim protection, and waiver of the entire tax, interest and penalty was granted with recovery stayed during the pendency of the appeal.

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Issues: Whether collection of toll tax by the applicant for a municipal corporation could be treated as a taxable business auxiliary service, and whether a waiver of pre-deposit and stay of recovery was warranted.

Analysis: Collection of toll tax was regarded as a sovereign function of the municipal corporation and not as a business activity. On that basis, the activity was found not to fall within business auxiliary service. The applicant was held to have made out a strong prima facie case for interim relief.

Outcome: Waiver of the entire tax, interest and penalty was granted and recovery was stayed during pendency of the appeal.

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