The Supreme Court on Wednesday issued notices to the Sales Tax and Value Added Tax departments of the Government of Karnataka in response to a Special Leave Petition (SLP) filed by Hindustan Aeronautics Limited (HAL).

The sales tax and VAT departments had issued tax demands to the tune of Rs. 1,500 crore ($332 million) and had attached HAL’s bank accounts to recover the dues.

A Division Bench of the Supreme Court comprising Justices D.K. Jain and C.K. Prasad stayed the recovery of tax from HAL earlier this week and issued notice to the Karnataka Government. HAL was represented by Senior Counsel Harish Salve, who was briefed by Economic Law Practice partner, Tarun Gulati. He argued that a 1984 judgment of the Supreme Court had held HAL to be an entrustment of the Government of India and had exempted it from sales tax. 

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