The Supreme Court on Wednesday continued a stay on an order of the Karnataka High Court directing Bangalore-based Hindustan Aeronautics Ltd. (HAL) to deposit 50 per cent of Rs. 1,519.31 crore as arrears of sales tax and value added tax (VAT) with the Government.

The Supreme Court also sought to resolve the tax dispute between the Defence PSU and the Government when it said the State could avoid levying VAT and sales tax on items manufactured by HAL for the defence forces.

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It, however, observed that the State could charge value-added tax (VAT) and sales tax for other items manufactured by HAL. It asked both the Chief Secretary of Karnataka and the Defence Secretary (Productions) to hold a meeting in two weeks to sort out the issue.

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