IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY FIFTH 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 : 19599 of 2009 Between: M/s. R9000 Textiles and Garments, Rep. by its Partner Sri T.Prasada Rao Koti, Hyderabad. ..... PETITIONER AND 1 The Commercial Tax Officer, Sultan Bazar Circle, Hyderabad. 2 The Appellate Deputy Commissioner (CT), Secunderabad Division, Hyderabad. 3 The Joint Commissioner (CT), Legal, Office of the Commissioner of Commercial Taxes, Government of Andhra Pradesh, 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 or order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 1s respondent in insisting for payment of the balance disputed tax and is contemplating to take coercive steps in view of the orders of the 2nd respondent who partly dismissed and partly remanded the appeal for the tax period April, 2006 to March, 2007 as illegal, arbitrary, high handed and contrary to the Provisions of the Act and set aside the same and declare that the petitioner is entitled for input tax credit on the Plant & Machinery, Packing Materials used for ready made garments and restrain the 1st respondent from taking any coercive steps for recovery of the balance disputed tax of Rs.8,32,005/- out of the total disputed tax of Rs.16,64,009/- for the tax period April, 2006 to March, 2007 under AP VAT Act, 2005 pending disposal of the appeal before the Hon'ble STAT. 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{KSL} THE HON'BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No. 19599 OF 2009 ORDER: (Per The Hon’ble Sri Justice Goda Raghuram) The petitioner is a partnership carrying on business in Textiles and Garments registered under the provisions of the A.P. VAT Act, 2005 and CST Act 1956 and a dealer on the rolls of the first respondent. The petitioner applied before the Authority for clarification and advance ruling under Section 67 of the A.P. VAT Act, 2005 (the APVAT Act) seeking a clarification as to its entitlement for claim of input tax credit on its plant and machinery purchased locally from registered VAT dealers including air condition units, aluminium sheets, plywood, laminated sheets, MS plates, MS channels, MS angles and tiles etc., and electrical items like bulbs, tubes, fans cables, UPS etc., The Advance Ruling Authority (the Authority) by proceedings dated 02.02.2008 clarified that the petitioner is entitled to claim input tax credit on UPS and electrical items used in the business, but is not entitled in so far as it relates to air condition units, alluminium sheets, plywood, laminated sheets, MS plates, MS channels, MS angles and tiles etc. Since the Authority rejected the petitioner’s claim in so far as the air condition units etc., are concerned, the petitioner filed an appeal before the STAT in T.A. No.466 of 2008 challenging the order passed by the Authority. This appeal is pending. The first respondent passed an order of assessment dated 24.04.2008 for the tax periods April, 2006 to March, 2007 and April, 2007 to October, 2007 rejecting the claim of input tax credit on air condition units etc., as also the claim of input tax credit on the turnover of UPS and electrical items. The electrical and UPS items were within the scope of the Authority’s decision as to legitimacy of the claim for input tax credit. The first respondent also rejected input tax credit claim on packing material used for taxable goods, that is also a grievance. Against the order of assessment passed by the first respondent, the petitioner filed an appeal to the second respondent along with the application for stay. As the second respondent rejected the application for stay by proceedings dated 19.01.2009, the petitioner filed a revision before the third respondent on 31.01.2009 which was dismissed by the proceedings dated 12.2.2009. The first respondent consequently employed coercive measures for recovery of the disputed tax. The petitioner thereupon filed W.P. Nos.4098 and 4105 of 2009. It is pleaded that this Court had granted stay of recovery of the disputed demand. The second respondent by order dated 09.04.2009 disposed of the appeals partly remanding and partly dismissing the appeals. The claim of input tax credit on air condition equipment, electrical fixtures, UPS, computers and printers was rejected. Against the portion of the appellate order of the second respondent rejecting the appeals, the petitioner carried the matter to the STAT in T.A. Nos.441 and 442 of 2009 for the tax periods 01.04.2006 to 31.03.2007 and 01.04.2007 to 30.10.2007, respectively. These are pending and the petitioner has paid the 50% of the disputed tax for maintaining the appeals before the STAT. The first respondent passed an order dated 20.06.2009 for the period April, 2007 to March, 2008. The substantive grievance in this writ petition is that the petitioner cannot seek stay before any other authority including the STAT in respect of the balance disputed tax payable during the pendency of TA. Nos.441 and 442 of 2009 before the STAT as both the appellate and revisional authorities had earlier declined to grant stay. The petitioner obtained stay from this Court in W.P.Nos.4098 and 4105 of 2009, as already stated. The 2nd respondent appellate authority in the order dated 9.4.2009 relied on the ruling of the Authority to hold that M.S. Angles and M.S. Channels used for interior decoration were not eligible for input tax credit and rejected the appeal of the petitioner exclusively on the basis of the ruling of the Authority. Section 67 of the A.P. VAT Act, 2005 in Sub-section (4) enjoins that the order of the Authority shall be binding on the applicant who had sought for clarification; in respect of the goods or transaction in relation to which a clarification was sought; and on all the officers other than the Commissioner. The proviso to this sub- section enacts that the order of the Authority shall be binding as aforesaid, if the dealer does not file appeal before the STAT within 30 days of the ruling in the manner prescribed. It is the case of the petitioner that as against the order/ruling of Authority dated 2.2.2008, the petitioner had preferred an appeal in time in T.A.No.466 of 2008 before the STAT and therefore in view of the proviso to sub-section (4) of Section 67 of the Act, the clarification by the Authority ought not to have been relied upon by the 2nd respondent - appellate authority in rejecting the petitioner’s appeal in so far as M.S. Channels etc., are concerned. The statutory position is clear. The 2nd respondent – appellate authority ought not to have relied upon the clarification/advance Ruling issued by the Authority by proceedings dated 2.2.2008 while disposing of the petitioner’s appeal though the order of assessment passed by the 1st respondent as confirmed in the appellate order of the 2nd respondent is pending consideration substantively before the STAT and would be decided therein on merits. We hold that the 2nd respondent in view of the provisions of Section 67(4) proviso could not have relied on the clarification issued by the Authority. As the petitioner has already deposited 50% of the disputed tax pending appeal before the STAT, we consider it appropriate to grant stay of recovery of the balance disputed tax as assessed and confirmed by the order of the 2nd respondent dated 9.4.2009 pending disposal of the substantive appeal of the petitioners in T.A.No.441 of 2009 before the STAT. The Tribunal shall, however, examine the merits of the petitioner’s claim in the said appeal on merits and in accordance with law. The writ petition is accordingly disposed of at the stage of admission after hearing the learned counsel for the petitioner and the learned Government Pleader for Commercial Taxes. _____________________ GODA RAGHURAM,J Date:25-9-2009 __________________________ RAMESH RANGANATHAN,J MRKR/ASP