Court temporarily stays Maharashtra VAT Act Order on offshore drilling tax levy, grants leave to amend petition

The Court temporarily set aside the Order under the Maharashtra Value Added Tax Act regarding the levy of tax on an offshore drilling contract. It issued a notice for further examination of the matter, restraining coercive recovery of dues as interim relief. The petitioners' argument that the activity already attracting service tax cannot be subjected to value added tax was considered, citing relevant precedents. The Court granted leave to promptly amend the petition, indicating a willingness to delve deeper into the dispute.

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Issues:
Challenge to Order under Maharashtra Value Added Tax Act regarding levy of tax on offshore drilling contract.

Analysis:
The petitioners challenged an Order passed by the Deputy Commissioner, State Tax Large Tax Payers Unit under the Maharashtra Value Added Tax Act. The dispute arose from the levy of value added tax on the petitioners' offshore drilling contract with ONGC. While the Central Government treated the contract as a service and imposed service tax, the Respondent argued that there was a transfer of right to use goods, making the petitioners liable for value added tax under the Act.

The petitioners contended that since service tax was already levied on the contract by the Central Government, the same activity cannot attract value added tax. They relied on the Supreme Court's decision in BSNL v. Union of India and the Madras High Court's ruling in Aban Lloyd Chiles Offshore Limited v. State of Tamil Nadu to support their argument. The petitioners highlighted that similar assessees were only subjected to service tax, and it was an isolated case where the Respondent took a different view.

The Court decided to examine the matter further, temporarily setting aside the availability of an alternate remedy. A notice was issued for a future date, and the Respondents were restrained from coercive recovery of dues as an interim relief. Additionally, the Court granted leave to amend the petition promptly.

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