THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE G.V.SEETHAPATHY WRIT PETITION No. 27270 of 2009 Between: M/s Strabus Software Solutions (P) Limited, rep. by its Managing Director Sri B.Venkataramana …Petitioner and The Commercial Tax Officer, Begumpet Circle, Hyderabad and others …Respondents Order: (Per GR, J) The 3rd respondent declined grant of stay by the order impugned dated 17-11-2009. Hence this writ petition. The petitioner is a Software Service provider, registered on the rolls of the 1st respondent under the APGST Act, 1957 and the CST Act, 1956. For the assessment year 2006-07, under the 1956 Act, the 1st respondent completed the assessment by proceedings dated 22-8-2007 and subjected an amount of Rs.1,00,94,164-00 to tax at the rate of 10%. The said net turnover was assessed to tax at the rate of 10% in the absence of ‘C’ declaration forms furnished. Aggrieved thereby, the petitioner preferred an appeal before the 2nd respondent and approached this Court seeking stay pending the appeal. By the order dated 27-7-2009, this Court disposed of W.P.No. 4907 of 2009 directing the Appellate Deputy Commissioner to dispose of the appeal expeditiously and within a period of four weeks and till then directing that there shall not be any recovery of the amount in question by employment of coercive methods. The Appellate authority by the order dated 18-9-2009 dismissed the appeal. The petitioner preferred an appeal thereagainst before the Sales Tax Appellate Tribunal and moved the 3rd respondent for grant of stay of collection of the disputed tax of Rs.9,81,659-00, pending disposal of the appeal by the Sales Tax Appellate Tribunal. The assessing authority brought to tax consultancy charges and un- branded software development charges including software maintenance charges and provision of On-site Manpower. The petitioner contended before the appellate and revisional authority, that the charges towards software development, maintenance and provision of On-site Manpower should be considered a professional service rendered to customer specific requirements, in the nature of professional services rendered and cannot be treated as a sale, since the software does not get transferred on to a floppy or a CD to the customer. The software was claimed tobe created at the customer’s site using the tools and materials provided by the customer. However the appellate authority dismissed the appeal and the revisional authority merely held that a perusal of the assessment and the appellate orders reveals that both the Authorities treated the disputed turnover as part of the sale price of Software since these charges are collected in connection with the development and supply of Customized Software as per the requirement of individual customers. Merely because the petitioner company collected the value of the Software under different heads does not entitle it to claim exemption on a part of the sale value of the Software, on the ground that it was a provision of service, held the authorities. Since the petitioner has an arguable position to address before the further appellate authority, namely, the Sales Tax Appellate Tribunal, we consider it appropriate that the petitioner ought not to be coerced to remit the total tax liability as determined by the assessing authority and confirmed by the appellate authority. Accordingly it is directed that, on the petitioner depositing 50 per cent of the demand of Rs.9,81,659-00 to the credit of the 1st respondent, within four weeks from today, (after taking credit for the amounts already deposited including by way of pre-deposit while preferring an appeal to the appellate authority or the Sales Tax Appellate Tribunal, as the case may be), the respondents shall refrain from taking any coercive steps to recover the balance tax due. In default of such deposit by the petitioner and within the time stipulated herein, the stay granted herein shall be considered as dissolved and the Revenue would be at liberty to recover the entire tax due, in accordance with law. The writ petition is disposed of as above at the stage of admission, after hearing the learned counsel for the petitioner and Sri A.V.Krishna Koundinya, the learned special standing counsel for Commercial Taxes. There shall be no order as to costs. _________________________ GODA RAGHURAM, J ____________________________ G.V.SEETHAPATHY, J 15th December, 2009. Note: Issue copy in three days. /B.O/ GRR