VAT Department Not To Initiate Coercive Measures Against PSU Pawan Hans: Delhi High Court

The Delhi High Court has granted a stay to helicopter charterer PSU Pawan Hans Ltd. against a VAT demand of Rs. 176 crores.

The division bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that the issue needs consideration and directed the VAT department not to initiate coercive measures for recovery of the VAT demand confirmed by the Delhi VAT Tribunal in the interim.

The appellant/assessee stated that it is in the business of chartering helicopters and has entered into agreements with various state governments and public sector entities for the hiring of its helicopters.

The respondent or department has requested payment of Rs. 175.99,768,191. The demand has been confirmed by the order.

According to the appellant, the helicopters are still in their possession and control. The appellant employs the pilots who operate the aircraft. Further, the maintenance of the helicopters is also done by the appellant.

The VAT authorities contended that the agreements entailed the transfer of the right to use, and therefore, the consideration would be taxable under the Delhi Value Added Tax Act, 2004.

The appellant submitted that it was registered with the Service Tax Authority for rendering the service of "Supply of Tangible Goods for Use Services" and has duly paid the service tax as chargeable under the Finance Act, 1994.

The appellant submitted that the order is palpably erroneous. If it is held that there has been a transfer of the right to use the aircraft, the appellant would not be liable to pay any service tax, as both taxes are mutually exclusive.

The court served the respondent with the notice and scheduled the case for a final hearing on March 16, 2023.

Case Title: Pawan Hans Ltd. Versus Commissioner of Trade and Taxes

Citation: 2023 LiveLaw (Del) 65

Date: 12.01.2023

Counsel For Appellant: Advocates Tarun Gulati, Rajat Bose, Ankit Sachdeva, Shohini Bhattacharya, and Kumar Sambhav

Counsel For Respondent: Additional Standing Counsel Satyakam

Click Here To Read The Order