THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.7186 OF 2011 Date:22.03.2011 Between: M/s.SPS Textiles and Industries Limited, Factory at 9-93, Ravikampud (P.O.), Thondangi Mandal, East Godavari District, represented by its Deputy General Manager (Admn.,) Mr.G.Ramjee .. Petitioner And The Commercial Tax Officer, Tuni Circle, Kakinada Division, Tuni, East Godadavi District and others .. Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.7186 OF 2011 ORDER: (Per Hon’ble Sri Justice Ramesh Ranganathan) The order under challenge in this writ petition is the one passed by the Joint Commissioner (CT) (Legal) (third respondent herein), dated 05.03.2011, rejecting the petitioner’s application for grant of stay pending disposal of the appeal by the second respondent. The facts, in brief, are that the petitioner, a Company incorporated under the Companies Act, 1956, claims to be engaged in the manufacture of Cotton Yarn, Polyester Spun Yarn and Polyester Viscose Yarn. It is a Value Added Tax (VAT) dealer on the rolls of the first respondent. The Government of Andhra Pradesh had, hitherto, granted M/s.Penna Textiles Limited the benefit of tax deferment under G.O.Ms.No.108, dated 20.05.1996 on cotton yarn produced by them. The benefit of tax deferment was extended on production achieved over and above the base production of 6,39,736 kgs. Pursuant to the approval of this Court, the petitioner took over the spinning division of M/s.Penna Textiles Limited on 22.12.2000. The Commissioner of Industries is also said to have approved the transfer of division to the petitioner. The petitioner claims to have continued production of cotton yarn in addition to polyester yarn and to have claimed sales tax deferment on all the products manufactured by them i.e., cotton yarn, polyester spun yarn etc. The first respondent issued a notice for the period August, 2009 to February, 2010 calling upon the petitioner to show cause why the tax deferment claimed by them, in respect of goods other than cotton yarn, should not be disallowed. Thereafter the first respondent passed an order of assessment dated 01.11.2010 disallowing sales tax deferment aggrieved by which the petitioner carried the matter in appeal to the second respondent along with an application for stay. The stay petition was rejected by the second respondent by order dated 07.01.2011 aggrieved by which the petitioner preferred a revision to the third respondent. The third respondent, in his order dated 05.03.2011, observed that M/s.Penna Textiles Limited was granted deferment only on cotton yarn manufactured by it prior to its merger with the petitioner company; the petitioner used to manufacture polyester yarn with its own machinery even before the merger; merely because M/s.Penna Textiles was merged with the petitioner, they would not be eligible to claim deferment even on polyester yarn; the assessing authority had, therefore, rightly disallowed such claim; the petitioner could not advance any rational argument in support of their claim; and, since the petitioner had deliberately claimed wrong deferment, it amounted to under declaration of tax payable by them and, therefore, even the penalty and interest orders passed by the assessing authority did not suffer from any infirmity. The counsel for the petitioner would contend that the Garnishee notices were issued to respondent Nos.4 to 8 even during the pendnecy of the revision petition before the third respondent; the tax deferment extended to M/s.Penna Textiles was with regards goods manufactured by them, and was not limited to cotton yarn; and, since the petitioner had requested for extending the benefit of tax deferment even with regards polyester yarn, and their claim was pending before the State Level Committee, the respondents ought not to have denied them the tax benefit in the interregnum. The order under challenge is merely an order rejecting stay. The third respondent has been conferred discretion under the Act either to grant stay or to reject it or to impose conditions for grant of stay. The substantive appeal preferred by the petitioner is still pending adjudication before the second respondent. We are neither called upon nor would we sit in judgment over the discretion exercised by the third respondent in rejecting stay save perversity. The order of the third respondent does not suffer from any such error warranting interference in proceedings under Article 226 of the Constitution of India. We refrain from expressing any opinion on merits inasmuch as the substantive appeal is still pending adjudication before the second respondent. Any observations which we may make on merits would influence exercise of appellate jurisdiction by the second respondent herein. Suffice to hold that we are satisfied that the order of the third respondent exercising discretion in refusing stay is not one which necessitates interference by this Court. It is made clear that on payment of disputed tax, the interest and penalty, the authorities shall forthwith recall the Garnishee Orders, and permit the petitioner to operate their bank accounts. The writ petition fails and is, accordingly, dismissed. However, in the circumstances, without costs. ________________ (V.V.S. RAO, J) _____________________________ RAMESH RANGANATHAN, J 22.03.2011 KH