Court Rules on Bank Guarantee for Tax Dispute; No Coercive Action Until Decision Made Under Central Sales Tax Act

The HC addressed a petition concerning the requirement of a bank guarantee for differential tax related to supplies made against C Forms and the threat to halt the supply of HSD and Petrol. The Court instructed the Deputy General Manager of IOCL to consider the Petitioner's arguments regarding the statutory obligations under the Central Sales Tax Act and make a reasoned decision. Additionally, the Court ordered that no coercive measures be taken against the Petitioner until a decision is rendered, and any adverse order should not be enforced for two weeks post-communication. The petition was disposed of without costs, urging an amicable resolution.

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Issues Involved:
The petition involves a dispute regarding the requirement of a bank guarantee for differential tax for supply made against C Forms, as well as the threat to stall the supply of High-Speed Diesel Oil (HSD) and Petrol, which the Petitioner claims violates their fundamental rights to carry on trade.

Details of the Judgment:

Issue 1: Bank Guarantee Requirement
The petition challenges the insistence on furnishing a bank guarantee for the differential tax for supply made against C Forms. The Petitioner argues that this requirement is in violation of their fundamental rights to carry on trade. The Court notes the statutory obligation under the Central Sales Tax Act for dealers to submit Form C for interstate transactions within three months. The Court directs the Deputy General Manager of IOCL to hear the Petitioner's contentions on the statutory aspect and make a reasoned decision on the representation, keeping all contentions open.

Issue 2: Threat to Stall Supply
The petition also seeks relief from the threat to stop the supply of HSD and Petrol, as indicated in certain letters. The Court emphasizes the need for an amicable resolution between the parties, considering the long-standing relationship between the Petitioners and IOCL. It directs that no coercive action be taken against the Petitioners until a decision is made on the representation, and any adverse order shall not be enforced for two weeks after communication.

Conclusion:
The Court disposes of the writ petition without costs, emphasizing the importance of resolving the issues amicably and in the interest of both parties. The decision highlights the need for the statutory mechanism to be discussed and appreciated to facilitate a resolution of the dispute.

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