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M/s Jagatjit Industries Ltd. v. The Commercial Tax Officer, Hyderabad & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 13822-13823 of 2015)Decided 23 Nov 2015
Civil Appeal Nos. 13822-13823 of 2015
Justice Anil R. Dave · Justice Adarsh Kumar Goel

Background

A company had already paid more than Rs. 2 crore in service tax. The commercial tax authorities demanded VAT, and the company challenged that demand in a pending petition. The order under challenge required the company to pay one-third of the disputed VAT amount before the petition could proceed.

Decision Breakdown

The Supreme Court modified the order in view of the company's earlier payment of service tax. Instead of paying one-third of the disputed VAT, the company's Managing Director was to give a personal bond undertaking that the company would pay the tax if the authorities succeeded in the pending petition. The appeal was allowed, with no order as to costs, and the pending applications were disposed of. The underlying tax dispute itself remains to be decided in the pending petition.

Lesson Learnt

A court may, depending on the facts, accept a personal undertaking in place of a cash deposit of a disputed tax demand. A business facing such a deposit condition can ask the court to consider this alternative, but the underlying tax liability is not decided by this order.

Official source (sci.gov.in)View Judgment (PDF)

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