THE HON’BLE SMT JUSTICE T.MEENA KUMARI AND THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.NO.9775 OF 2010 ORDER: ( Per the Hon’ble Smt Justice T.Meena Kumari ) This writ petition is filed seeking to quash the order of the Joint Commissioner in CCT’s Ref.No.LV(1)647/2009, dated 29.12.2009 as illegal and arbitrary and consequently restrain the 1st respondent- Commercial Tax Officer from taking any coercive steps for recovery of the disputed penalty and interest of Rs.6,41,373/- and Rs.25,714/- respectively for the period May 2007 to September, 2007 APVAT Act, pending disposal of the appeal in T.A.No.755 of 2009 before the Sales Tax Appellate Tribunal, Hyderabad. The brief facts of the case are that the petitioner is a registered dealer and doing business of providing internet services. Thereafter, the petitioner set up a unit for manufacture of bio-diesel at Survey Nos.6 & 7, Samsthan Narayanput, Nalgonda District and requested the 1st respondent to include the new line of business in VAT registration Certificate and the same was accordingly amended including the business of manufacture and sale of bio-diesel vide amendment dated 24.4.2007. The petitioner effected certain purchases of capital goods viz., plant and machinery for the purpose of setting up the factory during the period 25-10-2005 to 31.5.2007 and accordingly, claimed input tax credit to an extent of Rs.25,62,672/-. The petitioner claimed the entire input tax credit in lump sum in the monthly return filed for the month of May, 2007. While conducting audit, the 2nd respondent observed that since the manufacturing unit was included in registration certificate with effect from 24.4.2007, the petitioner cannot claim input tax credit from the date of grant of original registration with effect from 25.10.2005, but can claim only for a period of three months prior to incorporation of manufacturing unit in the registration certificate as per Section 13(2)(b) of APVAT, 2005 and passed order on 8.1.2008. Aggrieved by the same, the petitioner filed appeal before the 3rd respondent, who in turn, dismissed the appeal by an order dated 10.2.2009. Thereafter, the petitioner filed another appeal before the Sales Tax Appellate Tribunal in T.A.No.59 of 2010 which is pending adjudication. While so, the 2nd respondent issued notice dated 8.1.2008 levying penalty and interest in a sum of Rs.6,41,373 and Rs.25,714/- respectively. As the petitioner failed to file objections within the time stipulated, the 2nd respondent passed order on 20-02-2008. Challenging the same, the petitioner filed appeal before the 3rd respondent. The 3rd respondent vide his order dated 22-10-2009 dismissed the appeal affirming the view taken by the 1st respondent. Questioning the order of the 3rd respondent, the petitioner filed further appeal before the Sales Tax Appellate Tribunal, Hyderabad in T.A.No.755 of 2009 and the same is pending. Meanwhile, the petitioner filed stay petition before the 4th respondent seeking stay of collection of the disputed penalty and interest. The 4th respondent vide order dated 29-12-2009 dismissed the stay petition. Pursuant to the order of the 4th respondent, 1st respondent is insisting for payment of the disputed penalty and interest. Hence, the present writ petition is filed. The contention of the learned counsel for the petitioner is that the petitioner rightly claimed input tax credit on the capital goods purchased and used by it. He further contends that the interest can be levied only from the date of expiry of the time granted in the demand or tax due as per the return. He also contends that as the demand has been raised pursuant to order of assessment, no interest can be levied from the date of return. He further submits that pursuant to the order of dismissal of stay petition, 1st respondent is insisting for payment of the disputed penalty and interest and is threatening to take coercive action for recovery. Learned Special Standing Counsel for Commercial Tax on the other hand submits that the petitioner cannot claim input tax credit from the date of grant of original registration with effect from 25.10.2005, but can claim only for a period of three months prior to incorporation of manufacturing unit. Heard learned counsel for the petitioner and the Special Standing Counsel for Commercial Tax. In view of the facts and circumstances of the case, we are of the opinion that the writ petition can be disposed of at the stage of admission directing the petitioner to deposit 25% of the disputed penalty and interest each within a period of eight weeks from today. The first respondent is directed not to take coercive steps for collection/recovery of the balance disputed penalty and interest, pending finalization of the appeal in T.A.No.755 of 2009 before the Sales Tax Appellate Tribunal, Hyderabad. If any amount has already been paid by the petitioner, the same shall be given credit. With the above direction, the writ petition is disposed of accordingly. No costs. ____________________________ JUSTICE T.MEENA KUMARI ______________________________________ JUSTICE NOOTY RAMAMOHANA RAO rkk/kvrk Dated: 27-04-2010