Hindustan Petroleum Corporation Limited v. State of Maharashtra & Ors.

Mr. Arshad Hidaytullah, Sr. Advocate with Mr. Mohan P. Tekavde, Mrs. Swati M. Tekavde, Mr. Sachin Dere and Ms. Jayashri Gade for the Petitioner. Ms. Geeta Shastri, AGP for the Respondent Nos. 1 and 2 in W.P. No. 96/2011 and 97/2011. Mr. J. S. Saluja, AGP for the Respondent Nos. 1 and 2 in W.P. No. SM 2 wp.96.108 gr 98/2011 and 99/2011. Ms. Uma Palsuledesai, AGP for the Respondent Nos. 1 and 2 in W. P. 103/2011 and 104/2011. CORAM: DR. D. Y. CHANDRACHUD & A. A. SAYED, J.J. DATED : AUGUST 25, 2011. P.C.: All these Petitions under Article 226 of the Constitution have been instituted by the Hindustan Petroleum Corporation Limited, or as the case may be, Bharat Petroleum Corporation Limited, Government of India undertakings, to impugn a common order passed by the Maharashtra Sales Tax Tribunal on 16 June

2009. The order of the Tribunal arose out of directions that were issued by the Collector of Motor Spirit Sales Tax for the deposit of 70% of the Motor Spirit Tax due under the Bombay Sales of Motor Spirit Taxation Act, 1958. The order of the Collector was challenged before the Tribunal in revision, which reduced the amount payable to 5% of the amount demanded.

Counsel appearing on behalf of the Petitioners submitted that since the Tribunal came to the conclusion that the issues which were raised are “highly debatable and arguable”, in that view of the matter, the Tribunal was not justified in passing an order for deposit, though of a reduced amount. The learned Senior Counsel submitted that consistent with the provisions of Section 16 of the Act, even an order for furnishing security would have met the ends of justice, which the Petitioners are willing to provide. Moreover, it was sought to be urged that in the present case, the Petitioners have raised the question as to whether the SM 3 wp.96.108 gr Assistant Collector of Motor Spirits had jurisdiction to pass an assessment order and, particularly having regard to the fact that the Petitioners are public sector corporations, an order for furnishing security would have met the ends of justice.

On the other hand, the AGP has urged that, though the Tribunal came to the conclusion that the issues in dispute are “highly debatable and arguable”, the Tribunal had exercised its discretion by reducing the amount payable to 5%, from about 70% that was directed to be deposited by the Collector. Hence, the AGP submitted that no case for interference under Article 226 of the Constitution is made out.

Section 16 of the Bombay Sales of Motor Spirit Taxation Act, 1958 provides in Sub-Section 2 that no appeal against an order of assessment, with or without penalty, shall be entertained by the appellate authority unless it is accompanied by satisfactory proof of the payment of the tax, with penalty, if any, in respect of which the appeal has been preferred. Under the Second Proviso, the Appellate Authority can entertain an appeal without insisting on payment of tax or penalty, but on furnishing in the prescribed manner security for such amount of the tax and penalty as it may direct or on proof of payment of such smaller sum, with or without security, in a like manner, for such amount of the tax and penalty which remains unpaid. In the present case, an important aspect of the matter is that, the Tribunal itself found in paragraph 11 of its impugned decision that the disputed issues are highly debatable and arguable.

All the Petitions are accordingly disposed of. SM 5 wp.96.108 gr

In the event that the Petitioners fail to furnish guaranties as directed by the Court, the Appeals shall stand dismissed without further reference to the Court. (A. A. SAYED, J.)

(DR. D. Y. CHANDRACHUD, J.)