THE HON'BLE SRI JUSTICE B.PRAKASH RAO and THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.18363 of 2008 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) The order of the second respondent dated 11.06.2008, refusing to grant stay of collection of penalty pending disposal of the appeal before the Sales Tax Appellate Tribunal, is under challenge in this writ petition. The petitioner is a company registered under the Companies Act 1965, carrying on business in manufacture and sale of drugs and cosmetics. The products manufactured by it include Boroplus Prickly Heat Powder, Navratan Oil, and Chyawanprash. It is the petitioner’s case that all these three products fall under the definition of “drug” and, as such, are liable to be taxed only @ 4% under Item-88 of Schedule-I to the A.P. VAT Act, 2005 (for short ‘the Act’) but were classified as residuary goods exigible to tax @ 12 ½ % under Schedule-V of the Act. The first respondent passed assessment order dated 24.11.2005, which was the subject matter of challenge of an earlier writ petition. As the matter was remanded, the first respondent once again passed an order on 27.01.2006 bringing Navratan Oil to tax @ 12 ½ % as against 4%. Aggrieved by the said order, the petitioner preferred an appeal before the Appellate Deputy Commissioner. The stay application, filed along with the appeal, was dismissed both by the Appellate Deputy Commissioner as well as the Additional Commissioner, the second respondent herein. Aggrieved thereby, the petitioner has invoked the jurisdiction of this Court. This Court granted stay of collection subject to payment of half the disputed penalty. The petitioner paid half tax after adjusting the amounts already remitted. The appeal was dismissed by the Appellate Deputy Commissioner, and a further appeal thereagainst is said to be pending before the Sales Tax Appellate Tribunal. While so the first respondent, in terms of Section 53(1) of the VAT Act, asked the petitioner to show cause why penalty should not be imposed. The petitioner filed their objections thereto contending, among other grounds, that since they had already declared the sale transaction no penalty could be imposed. The Assistant Commissioner (the first respondent herein) levied penalty by his order dated 5.05.2006. Aggrieved by which the petitioner preferred an appeal before the Appellate Deputy Commissioner along with an application seeking stay of collection of penalty. Both the Appellate Deputy Commissioner and the Second respondent dismissed the stay applications against which the petitioner approached this Court earlier and this Court granted stay of collection of the disputed penalty. Meanwhile, the appeal filed by the petitioner was dismissed by the Appellate Deputy Commissioner by his order dated 25.04.2008 against which the petitioner filed a further appeal before the Sales Tax Appellate Tribunal which is said to be pending as on date. Seeking stay of penalty, pending disposal of the appeal before the Tribunal, the present writ petition is filed. This Court, by order dated 27.08.2008, directed the respondents not to take coercive steps for recovery of the said penalty. Sri S.R. Ashok, learned Senior Counsel appearing on behalf of the petitioner, would contend that, since the petitioner had declared the transaction, no penalty could be imposed, more so as the petitioner’s liability to tax at 12 ½ is in dispute, and is pending adjudication before the Sales Tax Appellate Tribunal. Learned Standing Counsel for Commercial Tax would, however, contend that Section 53 of the Act does not stipulate suppression of the transaction as a ground for imposition of penalty, and that penalty could be imposed as a matter of course where the petitioner had failed to pay the tax. We see no reason to examine these rival contentions inasmuch as a substantive appeal is pending before the Tribunal against both the orders imposing tax and levying penalty. As this Court had directed stay of collection of the disputed tax to continue pending disposal of the appeal before the Tribunal on payment of 50% of the disputed tax, we consider it appropriate to dispose of this writ petition directing the respondents not to take any coercive steps for recovery of the penalty pending disposal of the appeal before the Sales Tax Appellate Tribunal subject to the condition that the petitioner deposits 1/3 of the penalty demanded by the first respondent after deducting the amount, if any, already paid towards penalty, within a period of four weeks from the date of receipt of a copy of this order. With the above directions, the writ petition is disposed of. There shall be no order as to costs. ____________________ (B. PRAKASH RAO, J.) ___________________________ (RAMESH RANGANATHAN , J.) 21st June, 2010 Js.