THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE RAMESH RANGANATHAN W.P. No.13070 of 2009 28-08-2009 BETWEEN; M/s Cavinkare Private Limited, rep. By its Sr. Finance and Accounts Officer, D.Venkitachalam ...Petitioner vs. The Assistant Commissioner of Commercial Taxes, Vijayawada and two others. ...Respondents THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE RAMESH RANGANATHAN W.P. 13070 OF 2009 ORAL ORDER: (Per RR,J) The order impugned in this writ petition is the notice issued by the 1st respondent-Assistant Commissioner (CT), LTU, Vijayawada Division, Krishna District dated 26-06-2009, whereby the petitioner herein was called upon to pay the balance tax of Rs.21,75,680/-. The case of the petitioner is that it is engaged in manufacture and sale of cosmetics and also foods and that it has two divisions viz., Personal Care Division for Cosmetics and Foods Division where masala powders and vermicelli are manufactured and sold. The petitioner claimed the benefit of input tax credit, for both the divisions together, under Section 13(6) of the A.P.VAT Act,2005( for short “the Act’). The assessing authority, relying upon Rule 20(6) of the A.P.VAT Rules,2005, however held that input tax could only be claimed division wise. Under Section 13(6) of the Act, input tax for transfer of taxable goods outside the State by any VAT dealer, otherwise than by way of sale, shall be allowed for the amount of tax in excess of 4%. “Dealer” is defined, in Sec.2(10) of the Act, to means any person who carries on the business of sale and distribution of goods. Rule 20(6) of the A.P. VAT Rules,2005 which has been relied upon by the assessing authority, provides that where any of dealer is able to establish that specific inputs are meant for a specific output, input tax credit can be claimed separately for the taxable goods. Sri S.Dwarakanath, the learned counsel for the petitioner, would submit that the petitioner herein had filed composite returns for both the divisions together, that it has one TIN number and, as such, they are entitled to claim the benefit of input tax credit available in connection with one division, for the other division also. The learned counsel would submit that Rule 20(6) applies only where a dealer is able to establish that specific inputs are meant for specific inputs, that it is an enabling provision, which would entitle the dealer to claim the benefit of the formula prescribed therein in case they are able to establish that specific inputs are meant for specific outputs and that it is not open to the Department to place reliance on the said Rule to deny the petitioner the benefit of the input tax credit available to them under Section 13(6) of the Act. The Deputy-Commissioner-first appellate authority had earlier rejected the petitioner’s stay application pending disposal of the appeal before him. Aggrieved thereby, the petitioner had filed W.P.No.9837 of 2009 and this Court, by order dated 06.05.2009, had granted stay of recovery of the balance disputed tax pending disposal of the appeal before the appellate authority subject to the condition that the petitioner deposited 50% of the disputed tax within a period of eight weeks from the date of the order. This court also made it clear that, if any amount was already paid, the same should be given credit to. Sri S.Dwarakanath, Learned counsel for the petitioner, would submit that, pursuant to the orders passed in the aforesaid writ petition, the petitioner has already paid 50% of the disputed tax and, on the first appeal being rejected by the Deputy Commissioner, they have preferred a second appeal to the Sales Tax Appellate Tribunal(STAT), which is still pending. As is evident from the contentions aforeextracted, the petitioner has an arguable case in the appeal pending before the STAT and, since the petitioner has already paid 50% of the disputed tax, the respondents are directed not to take any coercive steps for recovery of the balance disputed tax till the appeal pending before the STAT is finally heard and disposed of. The writ petition is disposed of as above. No costs. ______________ GODA RAGHURAM,J __________________ RAMESH RANGANATHAN,J 28th AUGUST, 2009. TSNR