IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE FIFTEENTH DAY OF SEPTEMBER TWO THOUSAND AND NINE PRESENT THE HON'BLE SRI JUSTICE GODA RAGHURAM and THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO : 19408 of 2009 Between: M/s. Integrated Clean Room TEchnologies Ltd., Flat No. 303, Surabi Lotus, Near Image Hospital, Ameerpet, Hyderabad, rep. by its Director, Mr. U.Srinivas Murthy ..... PETITIONER AND 1 the Commercial Tax Officer, Srinagar Colony Circle, Hyderabad. 2 The Commercial Tax Officer, Vengal Rao Nagar Circle, Hyderabad. 3 The Appellate Deputy Commissioner ( CT) Punjagutta Division, Hyderabad. 4 The Additional Commissioner ( CT ), Legal ( FAC) Office of the Commissioner of Commercial Taxes, Government of A.P., Hyderabad. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an appropriate writ, order or direction more particularlyu one in the nature of writ of Mandamus declaring the action of the 4th respondent in passing the impugned orders dated 10.08.2009 in CCT's Ref. No. LIII(2)/314 & 315/2009 in directing deposit of 50% of the disputed interest amount of Rs. 8,03,617/- and penalty amount of Rs. 27,36,493/- for the trax period April, 2005 to MArch 2007 as a condition for grant of stay pending appeals before the 3rd respondent as illegal, arbitrary highhanded, onerous and contrary to the provisions of the Act and set aside the same and consequently restrain the 1st and 2nd respondents from taking any coercive steps for recovery of the disputed interest and penalty in pursuance of the recovery notice issued by the 2nd respondent dated 24.08.2009 pending disposal of the appeals before the 3rd respondent and pass Counsel for the Petitioner:MR.BHASKAR REDDY VEMIREDDY Counsel for the Respondent No.: GP FOR COMMERCIAL TAX The Court made the following : ... Form-NIC-OGS/WP{KSRANI} THE HON'BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESHRANGANATHAN WRIT PETITION NO : 19408 of 2009 ORDER: (Per THE HON'BLE SRI JUSTICE GODA RAGHURAM) The petitioner is a limited company and registered dealer under the provisions of A.P.VAT Act, 2005 and CST Act. It is also an assessee on the rolls of the 1st respondent. For the tax period April 2005 to March, 2007, the petitioner reported the turnovers and paid the applicable tax. The petitioner is a manufacturer of two clean rooms in two variations namely standard variety and customized variety. The standard variety comprises of sale of clean rooms whereas the customized variety involves construction of the consumer’s room to make it clean. The petitioner is paying tax on the turnover on standard variety treating it as sale and on the customized variety as one involving a works contract. Though petitioner is an assessee on the rolls of the 1st respondent, the 2nd under an authorization by the Deputy Commissioner under Rule 59 of the A.P. V.A.T. Rules, 2005, conducted an audit and proposed to levy tax on the turnover relating to the customized variety treating the same as sale and not a works contract as claimed by the petitioner. Against the same, the petitioner preferred an appeal to the 3rd respondent along with an application for stay, which was rejected by the 3rd respondent by proceedings dated 30.10.2008. The petitioner thereupon moved the 4th respondent for stay of recovery of the balance disputed tax. The 4th respondent through proceedings dated 21.11.2008 granted stay of recovery of disputed tax on the condition of the petitioner depositing 50% of the balance disputed tax, which the petitioner deposited. While so, the 2nd respondent passed orders after an ambiguous notice levying interest and penalty; at 100% of the disputed tax towards penalty and interest at 1% computing the delay from the due date of the returns and not from the date of the order of assessment. Challenging the levy of tax and penalty the petitioner preferred appeals along with applications of stay before the 3rd respondent. The 3rd respondent rejected the stay applications through orders dated 13.7.2009 whereupon the petitioner moved the 4th respondent seeking stay of recovery of disputed tax and penalty. The 4th respondent by order dated 10.8.2009, impugned herein, granted stay of collection of the disputed penalty only till the disposal of the appeals by the Appellate Deputy Commissioner on condition that the petitioner pays 50% of the balance disputed penalty and the interest component, within four weeks from the date of the impugned order. Aggrieved whereby the writ petition is filed. It is the case of the petitioner that the treatment of the turnover on customized clean rooms as a sale instead of works contract is fundamentally misconceived and he has an eminently arguable case before the appellate authority and that at any rate, there was no justification for levying penalty and in any event at 100% treating it as willful neglect or fraudulent conduct in failing to disclose the turnover under the proper head of account. The levying of interest from the date the return became due is also assailed on the ground that interest is payable after the order of assessment is passed. In view of the circumstances of the case, since the substantive appeals before the Appellate Deputy Commissioner – 3rd respondent are pending on the orders imposing penalty and interest, we consider it appropriate to direct stay of collection of disputed penalty and interest till disposal of the appeals by the 3rd respondent on condition that the petitioner pays an amount of Rs.8.00 lakhs towards penalty within a period of four weeks from today. In default of such payment, the stay granted herein stands dissolved. The writ petition is disposed of as above after hearing the learned Special Standing Counsel for the Commercial Taxes. _____________________ GODA RAGHURAM,J __________________________ RAMESH RANGANATHAN,J Date:15-9-2009 ASP