Retrospective tax clarification challenged, with interim protection granted against recovery pending scrutiny of the later circular.

Interim protection against coercive recovery was granted where the petitioner challenged a show cause notice and supporting circular on the basis that the transactions fell within the residuary service entry taxable at 5% during the relevant period. The Court noted that the impugned demand relied on a later circular proposing a higher rate and found a prima facie case that a later clarification could not be applied retrospectively to an earlier tax period. The writ petition was admitted, and recovery was stayed pending further hearing of the challenge.

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Issues: Whether interim protection against coercive recovery should be granted pending adjudication of the challenge to the show cause notice and the supporting circular.

Analysis: The order records a prima facie case on the petitioner's contention that the transactions fell within the residuary service entry applicable at 5% during the relevant period, while the impugned demand was founded on a later circular proposing a higher rate. The Court noted that the circular was the basis of the proceeding and that the challenge raised a substantial question as to whether a later clarification could be applied retrospectively to the earlier tax period. In that background, the Court admitted the writ petition and protected the petitioner against coercive recovery in the meantime.

Conclusion: Interim protection against recovery was granted and the challenge was directed to be heard further.

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