Case Law Details
Smt Sanchita Saxena And 16 Ors Vs State of Assam And 6 Ors (Guahati High Court)
The Gauhati High Court considered an interlocutory application seeking a stay on the operation of a circular dated 14 November 2025 issued by the Finance (Taxation) Department, Government of Assam. The applicants were Indian Made Foreign Liquor (IMFL) On-Shop owners who challenged the requirement imposed by the circular directing payment of Value Added Tax (VAT), with a further stipulation that failure to pay would result in non-renewal of their shop licences.
The applicants argued that the VAT demand imposed through the circular was unreasonable and arbitrary. They sought interim protection to prevent enforcement of the circular pending adjudication of the writ petition.
On behalf of the State, the Excise Department submitted that the obligation to pay VAT was not created by the impugned circular but arose from a statutory amendment to the Assam Value Added Tax Act, 2003, introduced in 2015 with effect from 17 June 2015. It was contended that despite the statutory mandate, the applicants had failed to register under the VAT regime and did not make the required payments. The Finance Department opposed the grant of any interim relief, emphasizing that the requirement was statutory and involved state revenue.
After examining the submissions and materials on record, the Court held that the VAT liability was statutory in nature, having been introduced by an amendment to the VAT Act in 2015. Since the statutory provisions themselves were not under challenge, the Court found that no blanket interim stay on the circular was warranted.
The Court directed that the applicants were required to register under VAT and pay the prescribed tax. However, it ordered that the issue of VAT liability for the period from the date the statutory amendment came into force until the issuance of the circular dated 14 November 2025 would be kept in abeyance and decided later after filing of returns by the concerned departments. The Court further clarified that upon registration and payment of current VAT, renewal of IMFL On-Shop licences should not be denied on that ground. The interlocutory application was disposed of accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT
Heard Shri S Borthakur, learned counsel for the applicants/ writ petitioners, who by means of this application are praying for stay of the operation of the Circular dated 14.11.2025 issued by the Commissioner and Secretary to the Govt. of Assam, Finance (Taxation) Department.
It is the contention of the applicants that they are the IMFL On Shop owners and by the aforesaid impugned Circular dated 14.11.2025, VAT has been directed to be paid and a further clause has been given that in failure to make such payment, the On Shop Licenses would not be renewed.
Shri Borthakur, learned counsel for the applicants has advanced various submissions to support the claim that the impugned demand is unreasonable and arbitrary.
Per contra, Shri RR Gogoi, learned Standing Counsel, Excise Department, Assam has submitted that the requirement to pay such VAT is a statutory requirement which was introduced by the amendment of the Assam Value Added Tax Act, 2003 made in the year 2015. The effective date is from 17.06.2015 and in spite of the prescription of the statue, the applicants did not take steps for registering themselves under the VAT and making the consequential payment.
Shri B Gogoi, learned Standing Counsel, Finance Department, Assam has strenuously opposed the prayer for interim order and has submitted that the requirement being a statutory requirement wherein, the revenue of the State is involved, no order of stay be passed.
After hearing the rival parties and on perusal of the materials on record, this Court is of the opinion that the requirement being statutory in nature which was introduced by the amendment of the VAT Act in the year 2015 and the provisions of the statute not being the subject matter of challenge, no blanket interim order is called for.
The applicants / writ petitioners are, therefore, required to get themselves registered and pay the prescribed VAT. It is, however, provided that the aspect of such payment from the date when the statute had come into operation till the notice dated 14.11.2025 shall be kept in abeyance and the same would be decided after filing of the returns by the respective Departments.
It is clarified that upon such registration and payment of the current VAT, the renewal of licence is not to be refused on that ground.
The interlocutory application accordingly stands disposed of.
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