Interim stay on VAT interest recovery granted subject to timely payment of the admitted tax demand

Interim protection against recovery of interest under Section 42(3) of the Tamil Nadu Value Added Tax Act, 2006 was considered where the petitioner disputed the interest demand on the basis that VAT credit standing in the merged company's account had not been transferred. The Court granted stay only against recovery of interest and tied that relief to a condition that the admitted tax demand be paid within two weeks, making compliance with the admitted liability the basis for continuing protection.

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Issues: Whether interim stay could be granted against recovery of interest under Section 42(3) of the Tamil Nadu Value Added Tax Act, 2006, pending payment of the admitted tax demand.

Analysis: The petitioner challenged the interest demand on the ground that the VAT credit lying to the credit of the merged company had not been transferred to its account. The petitioner also stated that the quantified tax demand would be paid within two weeks. In view of that submission, the Court granted protection only against recovery of interest and made the relief conditional upon payment of the admitted tax amount within the stipulated time.

Conclusion: Interim stay against recovery of interest was granted subject to the petitioner paying the admitted tax demand within two weeks.

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