P.Sheik Dawood vs. The State Tax Officer

Held

The Court decided to set aside the impugned order dated 23.07.2026. This decision was based on the petitioner's agreement, on instructions, to remit 10% of the disputed tax liability. The Court found this condition to be a reasonable basis for relief, drawing precedent from a similar case (W.P.No.2921 of 2026 dated 30.01.2026). The reasoning was that by fulfilling this condition, the petitioner demonstrated a willingness to comply with the tax authorities, warranting a reconsideration of the order. The ratio decidendi is that High Courts may, in writ jurisdiction, set aside tax demands on condition of partial payment of disputed tax, especially when similar precedents exist and the matter is subject to further adjudication by the Supreme Court. The operative direction was to set aside the impugned order and remand the matter to the original authority for fresh consideration. Any order passed pursuant to the remand is to be kept in abeyance until the decision of the Supreme Court in S.L.P.No.37326 of 2017 is received. The issue of jurisdiction and violation of statutory provisions was not definitively decided on merits but was rendered moot by the remand.

Facts

The petitioner, P. Sheik Dawood, challenged an order dated 23.07.2026 passed by the respondent, The State Tax Officer, determining a tax liability of Rs. 1,52,488. This liability was on account of the alleged non-payment of Reverse Charge Mechanism (RCM) on seigniorage fee payments. The petitioner contended that the order was passed without jurisdiction and in clear violation of statutory provisions. The writ petition sought to quash this order. The respondent accepted notice. The Court noted that in substantially similar circumstances, a previous order dated 30.01.2026 in W.P.No.2921 of 2026 had set aside the impugned order on the condition of paying 10% of the disputed tax.

Key Issues

1. Whether the impugned order dated 23.07.2026, determining a tax liability of Rs. 1,52,488 on account of non-payment of RCM on seigniorage fee, is without jurisdiction and in violation of statutory provisions? Petitioner's arguments: The petitioner argued that the order passed by the respondent was without jurisdiction and in clear violation of statutory provisions. No specific provisions were named in the petition, but the challenge was based on the fundamental legality of the assessment. Revenue's arguments: The respondent, represented by the learned Government Advocate (Tax), accepted notice. The judgment does not record any specific arguments made by the revenue in defense of the impugned order, beyond accepting notice and appearing before the court.