Interim protection against tax recovery granted pending Supreme Court relief, subject to further deposit and temporary restraint on coercive action.

Pending a civil appeal before the Supreme Court on the taxability issue, the writ petitions against recovery notices under the Karnataka Value Added Tax Act were disposed of with limited protective relief. The assessee was given time to seek interim relief from the Supreme Court, subject to a further deposit of Rs. 10 lakhs within four weeks as undertaken. Upon that deposit, no coercive recovery proceedings were to be taken for the disputed demand for the stated period. The direction was confined to temporary protection and did not decide the underlying tax controversy.

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Issues: Whether, pending the assessee's challenge before the Supreme Court, the writ petitions concerning recovery notices issued under Section 45(1) of the Karnataka Value Added Tax Act, 2003, should be disposed of by granting time to seek interim relief and by restraining coercive recovery on deposit of a further amount.

Analysis: The petitioners pointed out that the underlying question of taxability had already been decided against them, but the civil appeal remained pending before the Supreme Court. The Court considered it appropriate to grant breathing time to enable the petitioner-company to move the Supreme Court for interim relief. It therefore directed a further deposit of Rs. 10 lakhs within four weeks, as undertaken, and provided that upon such deposit no coercive process should be taken for recovery of the disputed demand during that period.

Conclusion: The petitions were disposed of by granting limited protective relief in favour of the petitioner-company, subject to deposit of Rs. 10 lakhs, and by restraining coercive recovery for four weeks.

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