THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE B.N. RAO NALLA W.P. No.21945 of 2011 Dated 28-09-2011 Between: M/s. Indoco Remedies Limited, Rep., by S.K.N. Basha, Zonal Manager, D.No. 2-2-1130/19/5, Shivam Road, New Nallakunta, Hyderabad. …Petitioner Vs. Commercial Tax Officer, Nacharam Circle, Hyderabad and others. …Respondents THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE B.N. RAO NALLA W.P.No. 21945 of 2011 Dated: 28-09-2011 ORAL ORDER: (Per: GR,J) Heard the learned counsel for the petitioner Sri Raghavan Ramabadran and Sri P. Balji Varma, learned Special Standing Counsel for Commercial Taxes, for respondents. The writ petition is filed assailing the Arrears Notice dated 14-07-2011 issued by the 1st respondent for the tax period April, 2005 to September, 2006 calling upon the petitioner to pay an amount of Rs.1,17,15,107-00. The Notice was issued on the ground that the Assistant Commissioner (CT), Secunderabad Division, after an audit, under provisions of the Andhra Pradesh Value Added Tax Act, 2005 (for short ‘the Act’) for the period 01-04-2005 to 31-03-2009 assessed under declared tax of Rs.1,89,80,943-00, out of which, the petitioner-assessee paid some amount and the balance is the tax due in respect of which impugned Arrears Notice was issued. In W.P.M.P.No.33297 of 2011 the petitioner applied to challenge additionally the order dated 08-01-2009 passed by the 4th respondent rejecting the revision filed against the order of the appellate authority rejecting an application for stay. This application (W.P.M.P.No. 33297 of 2011) has been ordered today. The petitioner inter alia is engaged in the manufacture and sale of products described as ‘medicated toothpaste’, which a desensitizing agent to reduce dental hypersensitivity. The petitioner in the returns filed had classified the products manufactured by it, under Entry 88 of Schedule IV of the Act which reads: Drugs and medicines whether patent or proprietary, as defined in clauses (i), (ii) and (iii) of Section 3 (b) of Drugs and Cosmetics Act, 1940 (Central Act 23 of 1940), and hypodermic syringes, hypodermic needles, perfusion sets, urine bags, catguts, sutures, surgical cotton, dressings, plasters, catheters, cannulae, bandages and similar articles, but not including:--- (emphasis supplied) (a) Medicated goods; (b) Products capable of being used as cosmetics and toilet preparations including Tooth Pastes, Tooth powders, cosmetics, Toilet articles and soaps; (c) Mosquito Repellants in any form; For the period in question the products of the petitioner were initially assessed at 4% vide the order of assessment dated 18-11-2006. Thereafter the 2nd respondent issued a show cause notice dated 12-06-2009 proposing to revise the order of assessment dated 18-11-2006 to re-classify the products under Schedule-V taxable at 12.5% and intimating that the disputed tax on this account is Rs.59,32,385-00. The petitioner filed objections dated 23-06-2009 to the show cause notice. Thereafter the 2nd respondent by the order dated 20-07-2009 confirmed balance tax liability at Rs.59,32,385-00, holding that the products in question cannot be classified as ‘drugs and medicines’ under Entry- 88 of Schedule-IV, but fall to be classified under Schedule- V which is a residuary provision. Aggrieved, the petitioner preferred an appeal to the 3rd respondent. Pending disposal of the stay application by the 3rd respondent, the 1st respondent – Assessing Authority issued a Recovery Notice dated 16-09-2009 which was challenged in W.P.No. 21113 of 2009. The writ petition was disposed of on 30-09-2009; the Recovery Notice was quashed and the respondents were directed not to take coercive steps for recovery till the stay application of the petitioner is disposed of by the 3rd respondent. The 3rd respondent rejected the stay application on 14-12-2009 where against the petitioner preferred a revision before the 4th respondent seeking stay of the collection of the disputed tax till the disposal of the appeal finally by the 3rd respondent. The 4th respondent – revisional authority – rejected the stay application on 08-01-2009. Eventually the 3rd respondent dismissed the appeal on 20-06-2011 confirming the finding that the products in question are excluded from the substantive Entry-88 in Schedule-IV in view of the clause (b) to the said Entry which excludes products capable of being used as cosmetics and toilet preparations including Toothpastes, Toothpowders, cosmetics, Toilet articles and soaps apart from Mosquito Repellants in any form. Against the order of the appellate authority rejecting the appeal substantively on 20-06-2011, the petitioner preferred a further appeal to the Sales Tax Appellate Tribunal (for short ‘the STAT’) and since the STAT cannot consider an application for interim relief in view of the provisions of Section 33 (6) of the Act, this writ petition is filed. In substance therefore what is assailed in this writ petition is the order of the 4th respondent – revisional authority dated 08-01-2009 rejecting the revision preferred by the petitioner seeking stay of collection of the disputed tax, as assessed and which assessment is confirmed by the appellate authority’s order dated 20-06-2011. The 4th respondent, by the order dated 08-01-2009 concluded that the fact of exclusion of manufactured goods capable of being used as cosmetics and toilet preparations, including Tooth Pastes, Tooth Powders, cosmetics, Toilet articles and soaps from Entry-88 of Schedule IV relating to ‘drugs and medicines’, indicates the legislative intent of levy of tax on certain ‘drugs and medicines’ other than those of capable of being used as cosmetics or Tooth Pastes, at the rates applicable to Schedule-IV and the intent to tax at the higher rate under the residual provision of Schedule V. Since the 4th respondent has a spectrum of discretion in exercising the revisional power and the reasoning recorded in the order dated 08-01-2009, is a possible view which cannot be characterized as ‘perverse’ no case is made out for interdiction in judicial review under Article 226 of the Constitution. On the aforesaid premises, the writ petition is misconceived and is accordingly dismissed. None of the observations made herein shall however be construed as an expression of this Court on the merits or otherwise of the petitioner’s claim with regard to whether the goods manufactured by it fall under Entry 88 of Schedule-IV or under Schedule-V and the learned STAT before which the substantive further appeal is pending, shall take a considered view uninfluenced by any observations herein. No costs. __________________________ JUSTICE GODA RAGHURAM ____________________________ JUSTICE B.N. RAO NALLA Dated: 28-09-2011 Pvks/*