Hindalco challenge to recovery MP Tax Act dismissed

Division bench of Justice Rajendra Menon and Justice RS Jha has disposed of the dispute between Hindalco Industries Limited against Northern Coal Fields Limited where Hindalco had challenged recovery by NCL under demand notices issued by it seeking deposit of tax under Madhya Pradesh Gramin Avsanrachna Tatha Gramin Vikas Act, 2005.

The petitioner has challenged the constitutional validity of the Act and in the subsequent petition had sought a stay on recovery under the said demands. The bench has however directed the petitioner to approach the Supreme Court as the question of validity of the Act is pending before the apex court by way of an appeal.

Hindalco is engaged in the business of manufacturing and dealing in aluminum & its semis. It owns and operates an aluminum plant and capital thermal plant at district Sonbhadra of Uttar Pradesh. Hindalco purchases coal from NCL for production of Aluminum and its semis.

NCL had sent impugned demand notices demanding a total sum of around 400 crores towards MPGATSV Tax to the Renusagar power division of Hindalco. The State of Madhya Pradesh had enacted the MPGATSV Act 2005 and framed rules thereunder to impose a tax on the value of production of minerals to levy a rural infrastructure and roads development tax in reference to the annual value of the minerals produced and sold in the state. NCL sought to recover the same through Hindalco in the demand notices.

Having heard petitioner's advocate senior counsel Mr RN Singh and Additional Advocate General Naman Nagrath on behalf of the state, the High Court bench observed that a proceedings arising out of the impugned demand notices was pending before the Supreme Court.

Mr RN Singh appearing for Hindalco pointed out to the court that an interim order had been passed in their favour and that the petitioner had furnished the bank guarantee in terms of the interim order and therefore no recovery could be permitted at this stage.

Additional Advocate General Mr Naman Nagrath on the other hand pointed out that the petition filed by the petitioner had been transferred to the Supreme Court and that any action for recovery by NCL is subject to interim orders passed by the Supreme Court. Mr Nagrath further submitted that the constitutional validity of MPGATSV Act 2005 has already been upheld by a division bench of the High Court in the case of Neogy and Sons vs. State of Madhya Pradesh & others. In view of the same, the Additional Advocate General stated that interference of this court is not warranted in the present case.

Considering the submissions of parties and in view of pendency of proceedings before the Supreme Court, the bench observed that judicial propriety demands that this court should not interfere into the matter and the petitioners should seek proper relief by appropriate proceedings in the Supreme Court. Accordingly the court dismissed the petition.

（Sourced from www.lawetalnews.com）