THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.925 of 2011 January 28, 2011 Between: M/s.GTL Infrastructure Ltd., Secunderabad represented by its Manager Accounts, Mr.S.Prithvidhar … Petitioner And The Commercial Tax Officer, S.D. Road Circle, Hyderabad and others ... Respondents THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.925 of 2011 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioner company is in the business of providing passive telecommunication infrastructure to mobile phone providers. They are Value Added Tax dealers and Central Sales Tax dealers under the relevant enactments. Being aggrieved by the recovery notice dated 12.1.2011, issued by the assessing officer – the first respondent herein, they are before this Court seeking redressal. The first respondent initiated penalty proceedings under Section 10(d) of the Central Sales Tax Act, 1956 (the CST Act). After issuing notice, he passed orders on 17.12.2008 levying penalty in a sum of `2,11,28,394/-. The petitioner assailed the same before the Appellate Deputy Commissioner. Their attempt to seek stay of recovery of penalty having not been successful they invoked the jurisdiction of the third respondent by filing a revision. Alleging that, even while the revision was pending, the Tax authorities were attempting to recover tax by coercive methods, the petitioner filed a writ petition being W.P.No.4684 of 2009. The same was disposed of on 06.3.2009 observing that no coercive method shall be used for recovery of penalty pending the revision before the third respondent. The revision was rejected by the third respondent on 20.2.2009 against which the petitioner filed W.P.No.5548 of 2009 which was disposed of by this Court staying collection of penalty on condition of the petitioner paying an amount of `30,00,000/- (Rupees thirty lakhs only) on or before 31.3.2009. The said order has been complied with. Be that as it is, the Appellate Deputy Commissioner by an order dated 27.12.2009, confirmed the penalty proceedings of the first respondent. As a consequence thereof, the first respondent issued the impugned arrears notice. The Counsel for the petitioner submits that the order of the Appellate Deputy Commissioner is unsustainable in law for the reason that various relevant issues were not considered; the goods procured by the petitioner under C-Forms were intended for resale; the petitioner had acted mala fide; and, therefore, Section 10(d) of the CST Act was not attracted. These contentions are refuted by the Special Counsel for Commercial Taxes. The second respondent, while confirming the order of the first respondent, came to the conclusion that the petitioner had acted with a malafide intention, they did not use the goods purchased under C- Forms for the purposes for which they were intended, thereby falling under Section 10(d) of the CST Act. A perusal of the order passed by the Appellate Deputy Commissioner shows that there is consideration of the issues raised by the authorized representative of the petitioner and it is neither a case of total non-consideration as pleaded, nor is it without application of mind. Therefore, prima facie, we are not able to countenance the plea that levy of penalty by the first respondent, as confirmed by the second respondent, is exfacie illegal, and suffers from an incurable defect. The petitioner deposited `30,00,000/- as ordered by this Court in W.P.No.5548 of 2009. That leaves the balance of about `1,81,28,394/- . When such a huge amount is due towards penalty, there cannot be absolute stay of recovery of the same. The petitioner has already approached the Sales Tax Appellate Tribunal (STAT) against the order of the Appellate Deputy Commissioner on 18.1.2011. The petitioner is an ongoing concern and any amount, in such quantity, going out of its corpus is likely to cause impediments in the smooth running of their business. As the petitioner has an arguable case on merits, we deem it proper to stay recovery of penalty subject to conditions. As noticed supra, the petitioner has already deposited an amount o f `30,00,000/-. On condition of depositing a further amount of `90,00,000/- (Rupees ninety lakhs only) within a period of four weeks from today, there shall be stay of the recovery of the penalty amount. We make it clear that, if there is any default in complying with this order, without further reference to the Court the conditional order shall stand rescinded, and it shall be open to the respondents to enforce the recovery notice in accordance with law. Liberty is given to the petitioner to mention before the STAT for expeditious disposal of the appeal. The STAT shall consider the same and pass orders in accordance with the law without being influenced by any of the observations made hereinabove. The writ petition stands disposed of accordingly. No costs. _______________ (V.V.S.RAO, J) ______________________________ (RAMESH RANGANATHAN, J) January 28, 2011 NOTE: Dispatch order copy by 01.2.2011. (By order) YS