THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION Nos.32890 AND 32891 OF 2010 COMMON ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) In both these Writ Petitions, filed by M/s. VITP (P) Limited, the relief sought for is to set aside the order dated 06.12.2010 passed by the Additional Commissioner (CT) (Legal), Hyderabad; to declare that the order passed by him on 17.08.2010 should continue till the disposal of the appeals filed before the Sales Tax Appellate Tribunal, Hyderabad (STAT) for the assessment years 2006-07 & 2007-08; and, consequently, the notice dated 08.11.2010 issued by the Commissioner, Hyderabad be set aside. As the same question arises for consideration in both these Writ Petitions, they were heard together and are now being disposed of by a common order. It would suffice, for the disposal of both these Writ Petitions, if the facts in W.P. No.32890 of 2010 are noted. The petitioner a registered dealer, under the A.P. VAT Act, 2005 and the CST Act, 1956, on the rolls of the Commercial Tax Officer, Jubilee Hills, Hyderabad is engaged in the business of providing infrastructure facilities within their I.T. park to various software companies. It is also registered with the Service Tax Department under the taxable category of ‘Mandap Keeper’ service, ‘Renting of Immovable Property’ service, and ‘Consulting Engineer’ Service. It claims to be discharging its service tax liability on the consideration received for providing the aforementioned services. The 1st respondent issued notice dated 08.11.2010 informing the petitioner that, despite a show cause notice having been issued to them on 05.03.2009, they had not filed any objections thereto and, as such, the final assessment as proposed in the said notice would be confirmed. It is the petitioner’s case that the show cause notice dated 05.03.2009 was subsequently served on them on 20.01.2010. The petitioner submitted a detailed reply thereto on 29.01.2010. The 1st respondent, thereafter, issued a revised show cause notice on 03.03.2010 proposing to assess the petitioner, for the year 2006-07, to the best of his judgment based on the Annual Reports of the petitioner. Tax was proposed to be levied on the turnover determined on the proportionate basis of movable and immovable properties of the petitioner. They submitted a detailed reply thereto on 22.03.2010. The 1st respondent, however, passed an order of assessment dated 30.06.2010 confirming the proposals made in the revise show cause notice, and issued a demand on the petitioner for payment of VAT. Aggrieved thereby, the petitioner preferred an appeal, along with a stay application, before the 2nd respondent who, by order dated 30.06.2010, rejected the stay application. Aggrieved thereby, the petitioner preferred a revision application, seeking stay of the demand of VAT, before the 3rd respondent on 22.07.2010. The 1st respondent issued arrears notice dated 07.07.2010 demanding payment of the assessed tax within seven days. Questioning the arrears notice dated 07.07.2010 the petitioner filed W.P. No.18052 of 2010 and this Court disposed of the Writ Petition, by its order dated 17.08.2010, directing the 3rd respondent to pass appropriate orders in the revision as expeditiously as possible preferably on or before 23.08.2010. The 3rd respondent, by his order dated 17.08.2010, granted stay on payment of 50% of the disputed tax. The petitioner claims to have paid the said amount. Thereafter, the Appellate Deputy Commissioner passed final order dated 22.10.2010 rejecting the appeal, and confirming the demand. Even before the petitioner could prefer an appeal thereagainst, the 1st respondent issued notice dated 08.11.2010 directing the petitioner to pay the balance disputed tax within three days. The petitioner filed an appeal before the STAT on 12.11.2010. They informed the 1st respondent, by letter dated 15.11.2010, that they had preferred an appeal before the STAT on 12.11.2010 against the order dated 22.10.2010 passed by the 2nd respondent; for the assessment years 2006-07 and 2007-08 the 3rd respondent had granted stay by order dated 17.08.2010 on payment of 50% of the disputed tax; and they had, accordingly, paid the said amount. The petitioner informed the first respondent that the stay granted by the 3rd respondent was, in terms of Section 31(3)(c) of the A.P. VAT Act, 2005, operative till the disposal of the appeal by the STAT; though there was no requirement for filing an application for extension of stay, they were filing such an application as an abundant caution; and the stay granted on 17.08.2010 be extended till the disposal of the appeal before the STAT. However the 3rd respondent by order dated 06.12.2010, while noting that the petitioner had paid 50% of the disputed tax for the period 2006-07 and 2007-08, considered it just and proper to grant stay of collection of the disputed tax on payment of 60% of the disputed tax; and that any amount paid towards tax shall be given credit to. Aggrieved thereby, the petitioner has invoked the jurisdiction of this Court by way of this writ petition. M/s. Lakshmi Kumaran & Sridharan, Learned Counsel for the petitioner, would contend that, in terms of Section 31(3)(c) of the VAT Act, an order passed by the Additional Commissioner in revision granting conditional stay, during the pendency of the appeal before the Appellate Deputy Commissioner, would continue to be in force till the disposal of the appeal before the STAT; as a result, the petitioners were only liable to pay 50% of the disputed tax which they had already paid even during the pendency of the appeal before the Appellate Deputy Commissioner; and the 3rd respondent was not justified in directing them to pay 60% of the disputed tax, when he had earlier directed payment of only 50% thereof. Under Section 31(1) of the VAT Act, any VAT dealer or TOT dealer or any other dealer objecting to any order passed, or proceeding recorded, by an authority may, within thirty days from the date on which the order or proceeding was served on him, appeal to such authority as may be prescribed. Section 31(3)(a) stipulates that, when an appeal is admitted under Sub-Section (1), the appellate authority may, on an application filed by the appellant and subject to furnishing of such security or on payment of such part of the disputed tax within such time as may be specified, order stay of collection of the balance of the tax under dispute pending disposal of the appeal. Section 31(3)(b) enables the appellant, against an order passed by the appellate authority refusing to order stay under clause (a), to prefer a revision petition, within thirty days from the date of receipt of the order of such refusal, to the Additional Commissioner who may, subject to such terms and conditions as he may think fit, order stay of collection of the balance of the tax under dispute pending disposal of the appeal by the appellate authority. Section 31(3)(c) stipulates that, notwithstanding anything in clause (a) or (b), where a dealer has preferred an appeal to the Appellate Tribunal under Section 33 the stay, if any, ordered under clause (b) shall be operative till the disposal of the appeal by such Tribunal. As noted hereinabove, the Appellate Deputy Commissioner had rejected the stay application filed by the petitioner during the pendency of the appeal before him. Aggrieved thereby the petitioner had preferred a revision, under Section 31(3)(b), to the Additional Commissioner who, by his order dated 17.08.2010, had granted stay of collection of the disputed tax subject to payment of 50% of the disputed tax within four weeks from the date of receipt of the order. The Additional Commissioner had also held that the amounts towards tax, if any, paid by the petitioner at the time of filing of the appeal shall be given credit to. It is not in dispute that the petitioner has already paid 50% of the disputed tax in compliance with the order of the 3rd respondent dated 17.08.2010. As their appeal was subsequently rejected by the Appellate Deputy Commissioner, they preferred an appeal to the STAT, which is said to be still pending. As such, in terms of Section 31(3)(c) of the VAT Act, the conditional order of stay passed by the Additional Commissioner, under Section 31(3)(b), shall continue to remain operative till the disposal of the appeal by the STAT. The order of the 3rd respondent dated 17.08.2010, granting stay on condition of payment of 50% of the disputed tax, would therefore continue to remain in force till the disposal of the appeal now pending before the STAT. The subsequent order of the Additional Commissioner dated 06.12.2010, directing stay on condition of payment of 60% of the disputed tax, is ex-facie contrary to Section 31(3)(c) of VAT Act. It is not as if the 3rd respondent was unaware of the statutory prescription under Section 31(3)(c) whereunder he was precluded from directing payment of 60% of the disputed tax when he had earlier, by his order dated 17.08.2010, granted stay on condition of payment of 50% of the disputed tax. The petitioner’s contention in this regard has, in fact, been noted by the 3rd respondent in his order dated 06.12.2010. Such blatant disregard for the statutory provisions of the VAT Act, (obviously in mindless pursuit of collection of revenue for the State), by a senior officer exercising quasi-judicial functions under the Act, must be deprecated. We were initially inclined to direct the 3rd respondent to pay exemplary costs from out of his pocket. However, as the learned Standing Counsel has fairly stated that the order dated 06.12.2010 is illegal, and that the 3rd respondent has been suitably advised to desist from passing such ex-facie illegal orders henceforth, we refrain from initiating any further action against the 3rd respondent, except to caution him to be more careful in future. The impugned order of the 3rd respondent dated 06.12.2010 is set aside, and the order of the 3rd respondent dated 17.8.2010 shall continue to remain operative till the appeals, for the assessment years 2006-07 and 2007-08, are disposed of by the STAT. The appeals, pending before the STAT, shall be disposed of as expeditiously as possible, preferably within a period of four months from today. Both the Writ Petitions are disposed of accordingly. No costs. _____________ V.V.S.RAO, J ___________________________ RAMESH RANGANATHAN, J 28.01.2011 Note: Send a copy of this order to the Sales Tax Appellate Tribunal. B/o asp