THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO. 18534 OF 2009 TUESDAY THE 15th DAY OF SEPTEMBER, 2009 Between:- M/S. Pooja Marbls, HIG, A-14, Gatchibowli, Hyderabad. ..Petitioner And Additional Commissioner (CT) Legal, O/o. The Commissioner of Commercial Taxes, Opp: Gandhi Bhavan, Nampally, Hyderabad and others. ..Respondents. THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO. 18534 OF 2009 Oral Order: (Per: RR, J) Heard the learned counsel for the petitioner and the Standing counsel for Commercial Taxes. The 1st respondent, by the impugned proceedings dated 09-07-2009, declined to grant stay and that is how this writ petition is instituted. The petitioner, a partnership firm executing civil works in the special economic zone, is registered on the rolls of the 4th respondent. It opted to pay tax by way of composition under Section 4 (7) (c) of the A.P. Vat Act, 2005 (for short ‘the Act’). The 3rd respondent took up assessment for the periods January, 2007 to March, 2007 and April, 2007 to February, 2008 and levied interest of Rs.45,163-00 and Rs.70,423-00 respectively. He also levied penalty under Section 53 of the Act for Rs. 3,44,082. Aggrieved by the order passed by the assessing authority, the petitioner preferred an appeal to the Appellate Deputy Commissioner (Commercial Taxes). The appeal preferred against the penalty order was dismissed. Thereagainst the petitioner preferred a further appeal to the Sales Tax Appellate Tribunal, Hyderabad Bench. The petitioner also filed an application for stay before the 1st respondent. Before the 1st respondent, the petitioner urged that the turnover assessable under Section 4 (7) (e) of the Act was the purchase value and not the value of its incorporation in the works contract. They also contended that interest, under Section 22 of the Act, could not simultaneously be levied with the tax assessed. The 1st respondent, however, rejected these contentions relying on the judgment of the Supreme Court i n Ganon Dunkerly & Co. v. State of Rajasthan1 wherein it was held that, in works contract, the taxable event was incorporation and it was the value of the incorporated goods that was assessable to tax at the appropriate rate legislatively determined. The 1st respondent held that Section 53 (1) of the Act postulated that, any under-declaration of tax, attracted penalty and, if under-declaration was 10% or less, the penalty leviable was 10% of the under-declaration of tax and, if the under declaration was more than 10% the penalty leviable was at 25% of the under declared tax. The 1st respondent further held that the assessing authority had rightly levied penalty at 25% of the under declared tax by invoking the provisions of Section 53 (1) of the Act. The petitioner is seen to have an arguable case with regard to the payment of tax itself, as the provisions of Section 4 (7)(e) of the Act do not expressly provide for the value of incorporation of the goods purchased or received from outside the State as the basis for computing the tax leviable. In case the petitioner succeeds in the appeal preferred against the assessment order levying tax, they cannot be said to have under declared tax in which event the levy of penalty would also be impermissible. In the facts and circumstances of the present case, interests of justice would warrant that no coercive steps be taken against the petitioner for collection of the disputed penalty pending disposal of the appeal before the Sales Tax Appellate Tribunal. There shall, accordingly, be a stay of all further proceedings by way of collection of disputed penalty. The writ petition is disposed of as above. No costs. JUSTICE GODA RAGHURAM JUSTICE RAMESH RANGANATHAN Dated: 15-09-2009 Pvks/*