The Supreme Court on Thursday in an interim order restrained all states from using coercive methods like attaching assets to recover sales tax on the service provided by telecom firms including Bharat Sanchar Nigam Limited (BSNL). Referring to a larger bench the question whether the states were empowered to ask for sales tax on services provided by these companies when they pay service tax to the Centre, a bench comprising Justice S Rajendra Babu and Justice AR Lakshmanan stayed any coercive action to be taken by the state governments in this regard. However, the bench said that the states were entitled to recover the tax from these companies if the assessment has been completed by the authorities. When counsel for BSNL, senior advocate Harish Salve pointed out that the states could not be given the freedom to recover whatever they have assessed and that the companies should have the right to challenge the assessment, the bench said that the recovery of dues for previously completed assessment would be subject to the statutory remedy of the companies.
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