Bombay HC Grants Interim Relief to United Spirits: Stays Interest Recovery Under Goa VAT Act Pending Clarity on ENA Taxability [Read Order]

The Bombay High Court at Goa granted interim relief to United Spirits Ltd. by staying the recovery of interest levied under the Goa Value Added Tax Act, 2005 as there was continuing uncertainty whether Extra Neutral Alcohol (ENA) was taxable under the VAT regime or under the new GST framework, the levy of interest required deeper judicial consideration before any coercive recovery could be permitted.

The Bombay HC heard a writ petition filed by United Spirits Ltd. challenging the order dated January 29, 2025, passed by the Additional Commissioner under the Goa Value Added Tax Act, 2005. The impugned order had upheld the levy of interest amounting to ₹53,58,986 under Section 25(4) for the alleged delayed payment of tax.

The petitioner contended that the levy of interest was unjustified as, till November 2024, there was no clarity regarding whether ENA would be subject to tax under the Value Added Tax (VAT) regime or under the new GST regime.

The petitioner further submitted that the VAT amount in question had already been deposited on September 30, 2021, given the uncertainty surrounding the nature of the taxability of ENA.

The attention was also drawn to a communication dated June 10, 2025, wherein the authorities had directed the petitioner to pay the disputed interest, failing which recovery proceedings would be initiated through the Recovery Cell. The petitioner, therefore, approached the Court seeking protection against coercive recovery.

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The Bench observed that the issue of whether interest could be levied regarding ENA’s taxability deserved deeper consideration. The Court noted that it expected the respondents to place their stand on record and considered it appropriate to protect the petitioner from coercive recovery.

Accordingly, the High Court directed that until the pleadings are completed and the matter is finally heard, no coercive steps shall be taken against the petitioner, including the recovery of the interest amount specified in the impugned order dated January 29, 2025.

The Bench comprising Justice Bharati Dangre and Justice Nivedita P. Mehta also issued notice to the Union of India, making it returnable on July 21, 2025, and granted the respondents time to file their affidavit in reply by July 10, 2025, with liberty to the petitioner to file a rejoinder thereafter.

The assessee was represented by Rohan Shah, along with Neha Shirodkar and G. Panandikar, while Shubham Priolkar appeared for the Revenue.

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