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VST Industries Limited v. The State of Uttar Pradesh & Ors.

Civil Appeal · 2019 INSC 547Decided 22 Apr 2019
Civil Appeal No. 3256 of 2019
Justice Ashok Bhushan · Justice K.M. Joseph

Background

The Allahabad High Court had passed an interim order permitting recovery proceedings against VST Industries for interest on Entry Tax arrears to continue, subject to the company depositing 50% of the demanded interest, and had tagged the matter with a connected writ petition (Writ-Tax No. 757 of 2018) involving another company, Indian Oil Corporation. VST Industries appealed to the Supreme Court against this interim recovery order, by which time roughly a third of the demanded interest had already been recovered from it.

Decision Breakdown

The Supreme Court noted that it had, by a separate order of the same date, already decided the connected Indian Oil Corporation appeals settling the broader question of interest liability under the relevant U.P. tax statute. Since VST Industries' own writ petition challenging the interest demand (Writ-Tax No. 961 of 2018) was still pending before the High Court and needed to be decided on its own facts, the Court disposed of this appeal by directing that no further recovery be made against the appellant towards the interest demand, and that any recovery already effected would remain subject to the final outcome of that pending writ petition.

Lesson Learnt

When a tax demand is under challenge in a pending writ petition, a taxpayer can secure interim protection from further coercive recovery from the Supreme Court itself, even while the underlying legal dispute is left to be finally resolved by the High Court.

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

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