2019 (6) TMI 1311 - HC - VAT and Sales Tax

High Court Upholds 50% Deposit Rule for Tax Stay Orders

The High Court upheld the Maharashtra Sales Tax Tribunal's decision requiring a 50% deposit of the total tax due as a condition for stay of recovery ... Stay of recovery proceedings - grievance of the Petitioner before us is that the issue arising before the Tribunal was a pure question of law, thus the order passed by the lower authority ought to have been stayed on a deposit of 10% as offered by the Petitioner - HELD THAT:- Its trite law that the scope of examination of the appeal at the final hearing and an application for stay of an order, challenged in appeal, pending disposal of the appeal, is entirely different. At the final hearing, the appeal is considered in depth and all the facets of the case are considered. On the other hand, while hearing an application for stay of the order in challenge before the Tribunal, a prima facie view of the strength of the case before it is considered. Therefore, where the issue is concluded by a decision of the superior forum or on decision of the authority hearing the stay application, then it would be a factor warranting a stay. In the present facts, we note that the submission of the Petitioner were duly considered and a prima facie view was taken after consideration of facts and the prevailing law. The challenge to the impugned order before us by the Petitioner is entitlement of lower tax on bunker fuel in view of Schedule 'C' to the Act. This on the ground that the bunker fuel is supplied to foreign going vessels. We note this submission was considered by the Tribunal and rejected at the prima faice stage, as the Petitioner had conceded the position that the bunker fuels are supplied to vessels which are not foreign going vessels. Petition dismissed. Issues:1. Challenge to the order of the Maharashtra Sales Tax Tribunal regarding stay of recovery proceedings.2. Interpretation of tax liability on sale of bunker fuel supplied to vessels beyond territorial limits of India.3. Consideration of lower tax rate under Schedule 'C' to the Act for bunker oil supplied to foreign going vessels.Issue 1: Challenge to Tribunal's Order on Stay of Recovery ProceedingsThe petitioner challenged the Tribunal's order directing a 50% deposit of the total tax due as a condition for stay of the recovery proceedings. The petitioner contended that the issue was a pure question of law and requested a stay on depositing only 10% of the tax payable. The Tribunal had considered the petitioner's submissions and took a prima facie view, ultimately directing a 50% deposit of the tax amount due for the stay.Issue 2: Tax Liability on Sale of Bunker FuelThe petitioner argued that no tax was payable on the sale of bunker fuel supplied to ships beyond the territorial waters of India. However, the Tribunal referred to a previous decision of the High Court which concluded against the petitioner's position. The Tribunal also noted that the petitioner admitted that the vessels to whom the bunker fuel was sold were not foreign going vessels. Consequently, the Tribunal found no fault with its prima facie view and upheld the requirement of a 50% deposit for the stay.Issue 3: Lower Tax Rate for Bunker Oil Supplied to Foreign Going VesselsThe petitioner claimed entitlement to a lower tax rate on bunker fuel supplied to foreign going vessels under Schedule 'C' to the Act. The petitioner relied on a Supreme Court decision regarding the definition of foreign going vessels. However, the Tribunal found that the petitioner's vessels did not qualify as foreign going vessels based on the petitioner's admission. The Tribunal held that the issue required detailed consideration at the final hearing of the appeal and upheld the 50% deposit requirement for the stay.The High Court dismissed the petition, affirming the Tribunal's order and emphasizing that the issue of tax liability and entitlement to lower tax rates required further examination at the final hearing of the appeal. The Court found the Tribunal's decision to direct a 50% deposit for the stay to be reasonable in light of the total amount due, including interest and penalty.