SC stays sales tax recovery from Nirma

New Delhi, Jun 29 (UNI) The Supreme Court today stayed the recovery of Rs 527.42 crores, demanded by the Sales Tax Commissioner, Ahmedabad, from detergent major Nirma Ltd.

''Until the issue is decided finally, the respondents are restrained from proceeding with the assessment process,'' a vacation bench, comprising Justice A R Lakshmanan and Justice Altamas Kabir, ruled after hearing the parties.

The bench also issued notices, returnable in four weeks, to the Commissioner and Deputy Commissioner, Sales Tax, Ahmedabad, on a petition filed by the company, challenging the Gujarat High Court order, dismissing its writ petition, challenging the demand served by the sales tax department.

Senior counsel Dushyant Dave, appearing for Nirma, contended that the petitioner were involved in the manufacture of soaps and chemicals, using Linear alkyl benzene (LAB) and paraffin as important ingredients, to manufacture which they used to buy kerosene from the Indian Oil Corporation Limited (IOCL). ''After extracting the paraffin, the residual kerosene was returned to the IOCL, and the same was not taxable, because IOCL sold the same in the open market to industrial customers, and the sales tax is regularly paid on the sale of return stream,'' he said.

The petition also contended that they have been paying statutory taxies and levies to the tune of Rs 5.25 crores every year, while it pays Rs 100 crores as sales tax alone. It noted that it began its production activities in Gujarat only after it was granted a sales tax exemption, amounting to Rs 34,235.28 lakhs for a maximum period till 2012.

''And the demand raised by the ST authorities, which, in fact, is payable by the IOCL, is being thrust on us,'' Nirma argued.

UNI AKS/SC VD RP HT1535