1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 25.03.2011 CORAM THE HONOURABLE MR.JUSTICE B.RAJENDRAN W.P.(MD).No.3529 of 2011 M/s.DCW.Ltd, Rep.By its Deputy General Manager, (Legal & Indirect Taxations) Mr.M.Thyaga Moorthy, Sahupuram, Tuticorin. ... Petitioner Vs 1)The Appellate Deputy Commissioner (CT) (FAQ), Tirunelveli. 2)The Commercial Tax Officer, Tiruchendur. ... Respondents Prayer:- Writ petition filed under Article 226 of the Constitution of India to issue a Writ of Mandamus to call for the records in SP No.1/2011 in AP No.T/3/2011 dated 24.02.2011 on the file of the learned Appellate Deputy Commissioner (CT) Tirunelveli, the first respondent herein and quash the same as illegal and against the principles of natural justice and forbear the respondents from recovering tax and penalty pending disposal of the appeal on the file of the first respondent. For Petitioner : Mr.M.Azeem For Respondents : Mr.S.C.Herold Singh O R D E R The petitioner is a manufacturer of caustic soda, PVC resins and chemicals and an assessee on the file of the second respondent. They were assessed for the year 2006-2007 under the Tamil Nadu General Sales Tax Act, 1959, to the taxable turn over of Rs.1,01,17,76,048/- and Rs.96,24,76,175/- respectively by rejecting the returns along with levy of penalty by the second respondent vide his proceedings dated 14.12.2010. As against the said levy, the petitioner herein has preferred an appeal before the first respondent / appellate authority in A.P.No.T/3/2011. Pending appeal, he has sought for an order of interim stay. The appellate authority vide its order dated 24.02.2011 has passed a conditional order, which is as follows:- “ii. The petitioners shall pay Rs.43,087/- in Tax under Section 3(4) being another 2.37% of the disputed tax (the petitioner has already paid Rs.8,63,700/- being 47.63% of Tax under Section 3(4) at the time of filing the appeal petition) and file a bank guarantee for the balance of tax and entire penalty (balance Tax: Rs.9,06,787/- under Section 3(4) and Entire Penalty : Rs.10,81,567/-) totalling to Rs.19,88,354/- on or before 23.03.2011. https://hcservices.ecourts.gov.in/hcservices/ 2 iii) the bank guarantee shall be for a period of six months that is upto 23.08.2011 and the duplicate copy of bank guarantee attested by Commercial Tax Officer, Tiruchendur circle shall be filed in this office for awareness and the file purpose.” 2. Aggrieved against the same on being directed to pay the bank guarantee towards 50% balance tax and penalty amount, the petitioner has come forward with the present Writ Petition challenging the impugned order among the other grounds. 3. The learned counsel for the petitioner would mainly contend that in an identical matter, this Court in the case of Tube Investments Vs. State of Tamil Nadu reported in 2010-11-16-TNCTJ has held that export sales cannot be included in the calculation of 1% amount under Section 3 (4). Based on the above judgment, that the very tax itself not leviable. He would further contend that the condition is onerous one. Even though the authority is well aware of the decision of this Court and the same has been brought to the notice of the authorities, in the order itself, they would say that the orders are referred to the higher authorities and the same is awaited for the acceptance of the said judgment. Therefore, the impugned order is per se illegal and not maintainable. 4. At the time of admission, Mr.S.C.Herold Singh, learned Government Advocate takes notice for the respondents. He would contend that it is only the discretion of the authorities concerned insofar as the grant of interim stay is concerned, normally this Court does not interfere. Hence, he would oppose the present Writ Petition. By consent, the Writ Petition itself is taken up for final final disposal. 6. It is also pointed out that the very same petitioner in respect of the earlier assessment came before this Court in W.P(MD). No.14743 of 2010 dated 20.12.2010 and this Court has struck down the same condition in respect of the stay application, but at the same time directed the appellate authority to dispose of the very appeal itself within a time frame. “4.In the light of the said submission, the impugned order is set aside and insofar as giving direction to the petitioner to furnish bank guarantee for the balance amount of tax as well as penalty and instead of furnishing bank guarantee, the petitioner is directed to execute personal bond, within a period of two weeks from the date of receipt of a copy of this order and the first respondent is directed to dispose of the appeal, within a period of three months from the date of receipt of a copy of this order. The Writ Petition is disposed of with the above direction. Consequently, connected miscellaneous petition is closed. No costs.” 7. Added further, a Division Bench of this Court in W.A.(MD). No.159 of 2005 dated 25.04.2005, in paragraph 3, it is held as follows:- https://hcservices.ecourts.gov.in/hcservices/ 3 “3. Having regard to the facts and circumstances of the case, we are of the opinion that the order passed by the learned single Judge is required to be modified in the interest of justice. It is directed that the appellant shall pay 50% of the tax component. If any amount has already paid, the balance amount should be paid, so that the total would come to 50% of the tax component. In respect of the balance liability towards tax and towards penalty, the appellant shall be permitted to file a personal bond undertaking to pay the amount. This may be done within a period of two weeks from the date of receipt of a copy of this order.” 8. Apart from that, it is pointed out that for an appeal minimum amount payable is 25%. In this case, the petitioner has already paid 47.3% in the stay application. No doubt, the authority has directed to pay the balance 2.37% of the disputed tax by way of bank guarantee for the entire balance amount as well as the penalty amount. 9. Suffice to say, in this case, as the issue in question is covered by the earlier judgment of this Court, the very levy itself is not permissible, as it does not come under the Act. Following the decisions cited supra, the impugned order is set aside in so far as directing the petitioner to furnish bank guarantee for the balance tax amount as well as the penalty. Instead of furnishing bank guarantee, the petitioner is directed to furnish personal bond within a period of two weeks from the date of receipt of a copy of this order and the first respondent is directed to dispose of the appeal itself within a period of three months thereafter. This Writ Petition is disposed of with the above directions. Consequently, the connected miscellaneous petition is closed. No costs. Sd/- Assistant Registrar (CO) /True copy/ Sub Assistant Registrar To 1)The Appellate Deputy Commissioner (CT) (FAQ), Tirunelveli. 2)The Commercial Tax Officer, Tiruchendur. +1CC TO THE SPECIAL GOVERNMENT PLEADER, SR.8232 +1CC TO M/S.S.KARUNAKAR, ADVOCATE SR.8137 ssm SR : 11.04.2011 : 3p/5c W.P.(MD).No.3529 of 2011 25.03.2011 https://hcservices.ecourts.gov.in/hcservices/