Tribunal’s pre-deposit condition for stay quashed; offshore works contract taxability debatable

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HC quashes order of Sales Tax Tribunal directing pre-deposit as a condition for granting stay against recovery of tax pending statutory appeal; Notes that dispute arose with respect to taxability of pipeline replacement works contract undertaken for ONGC at offshore platforms located beyond territorial waters;

Observes that Tribunal had rendered a prima facie opinion that in respect of sales effected to ONGC, in case the goods were appropriated to contract at supply base viz. port of import, then assessee was liable to tax as sale was completed within the State, while referring to SC ruling in ABB Ltd and Bombay HC decision in Raj Shipping; Stating that applicability of nexus theory to facts and circumstances in present case was a highly debatable issue, HC observes, if Tribunal was required to refer to not only the legal principles but eventually determine their applicability on the basis of terms and conditions of contract, there was no reason to impose any condition of part payment;

Legal position, as was emerging from the judgments rendered in two distinct cases, viz. a sale and by applying nexus theory to it or a sale in course of execution of a works contract, needed a deeper consideration which justified an unconditional stay of recovery, states HC while directing Tribunal to decide the matter finally within specified period

Citation: [TS-119-HC-2018(BOM)-VAT]

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