The Supreme Court on Thursday stayed the Rajasthan High Court order that allowed the income-tax department to attach cement manufacturer Ambuja Cements’ bank accounts and assets to recover value-added tax dues of around R80 crore for the assessment years 2006 to 2009.
The demand was raised on the company on the ground that it had wrongly availed of 75% sales tax exemption and deferment of VAT under the state government’s Sales Tax New Incentive Scheme, 1989.
A bench headed by justice JS Khehar also issued a show-cause to the department as to why costs should not be imposed on it.
The HC had declined to adjourn the matter to enable the advocates to appear and vacated the stay order on the request of a departmental officer merely on the ground that considerable amount of tax was involved. The counsels for the company could not appear due to lawyers’ strike.
Ambuja Cements senior counsel S Ganesh told the apex court that the June stay order granted by the HC restraining the state from taking any coercive action against the company “was in force for a considerable period of time and was suddenly terminated” without granting any opportunity to lawyers to present the case.
The cement manufacturer had approached the HC after the state government had in April issued three demand notices for levying R80 crore, including interest, failing which coercive recovery measures would be undertaken. Even due to threat of attachment measures, Ambuja Cements had deposited around R82 crore from time to time.
Pursuant to the SC disallowing any such tax exemptions in Binani Cements case in February, the state had issued notices demanding differential payment.