IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE NINETEETH DAY OF MARCH TWO THOUSAND AND TEN PRESENT THE HON'BLE MRS. JUSTICE T.MEENA KUMARI AND THE HON'BLE MR JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO : 2 4 0 8 2 of 2009 Between: M/s. Kirby Building Systems Limited, Plot Nos. 8 to 15, IDA, Phase-III, Pashamylaram, Medak, Medak district – 502 307. ..... PETITIONER V/s. The Assistant Commissioner (CT) LTU, Charminar Division, Hyderabad & 4-Ors. .....RESPONDENTS Counsel for the Petitioner : M/s. Lakshmi Kumaran & Sridharan Counsel for the Respondents: Govt.Pleader for Commercial Tax Govt.Pleader for Revenue The Division Bench of this Court made the following : (Order follows 2nd page) THE HON'BLE MRS. JUSTICE T.MEENA KUMARI AND THE HON'BLE MR JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION NO : 24097 of 2009 ORAL ORDER: {Per the Hon’ble Smt.Justice T.Meenakumari} Seeking a writ of Certiorari to quash the order dated 20-10-2009 passed by the second respondent in proceedings CCT’s RC.No.L-III(2)/402/2009 as well as the consequential notice dated 27-10-2009 issued by the first respondent in Ref.No.CHM/LTU/2009 demanding to pay an amount of Rs.7,58,801/- within three days from the date of receipt of notice and the order dated 20-7-2009 passed by the first respondent in Ref.No.CHM/VMU-1/2009 as illegal, arbitrary and consequently to restrain the respondents from recovering a sum of Rs.7,58,801/-from the petitioner towards penalty for the year 2007- 08 and to pass such other suitable orders as this court may deems fit and proper in the circumstances of the case. 2. The facts in brief are that the DGM Taxation in the petitioner-company filed the present writ petition. The petitioner- company, M/s. Kirby Building Systems Limited is engaged in the business of manufacturing of pre-engineered steel building system and steel guard rails. It is a registered dealer under the provisions of AP VAT and CST Act and are on the rolls of the Commercial Tax Officer, Mehdipatnam Circle, Hyderabad. 3. The present writ petition has been filed inter alia questioning the order dated 20-10-2009 passed by the second respondent and further challenges the notice dated 27-10-2009 passed by the first respondent demanding to pay an amount of Rs.8,13,343/- within three days. 4. It is stated that on 21-01-2009 the first respondent conducted an audit at the business premises of the petitioners, based on the authorization issued by Ld. Deputy Commissioner dated 07- 07-2008 along with notice in Form-VAT 304 dated 03-10- 2009. It is stated that on verification and examination of records on 15-4-2009 and 23-04-2009 for the years 2005-06, the first respondent issued a show cause notice dated 30-4-2009. 5. It is also stated that the notice dated 30-4-2009 proposed to levy tax of Rs.52,77,624/- for the period 200-07 on the following grounds: i) that the petitioners have under declared tax of Rs.7,66,635/- on sale of pre-engineered building systems; ii) that the petitioners have wrongly claimed input tax of Rs.7,23,125/- for the period from May 2006 to March 2007 on certain goods i.e., packing word, wooden boxes, cotton waste, corrugated sheets, ceiling fan, tube light and lamps, water tank, locks, helmets, cotton nose mask, hand gloves, ear plugs. iii) That the discounts and rebates of Rs.20,47,079/- under the Head “income” of the Balance sheet for the year 200-07 was proposed to tax @ 12.5% amounting to Rs.2,55,885/- alleging that the amount relating to discounts and rebates are not eligible for exemption under the provisions of the AP. VAT Act, 2005. iv) That the miscellaneous income of Rs.2,82,55,833/- under the balance sheet for the year 2007-08 was proposed to tax @ 12.5% amounting to Rs.35,31,979/- as the petitioners have not given detailed bifurcation of the amount received. 6. It is stated that the petitioner-company filed reply to SCN dated 30-4-2009 on 01-06-2009 and sought personal hearing. But the first respondent passed an order dated 08-6-2009 and dropped levy of tax on differential tax of deferment of Rs.7,66,635/- allowed input tax credit on an amount of Rs.15,10,000/- and disallowed input tax credit on an amount of Rs.2,13,125/- on certain items like tube lights, ceiling fans, water tank and locks etc., and confirmed levy of tax of Rs.30,40,248/- on miscellaneous income. 7. Aggrieved by the order dated 08-6-2009 passed by the first respondent, the petitioner company filed an appeal along with stay application on 15-7-2009 before Ld. Appellate Deputy Commissioner, Hyderabad and the same is still pending. Thereafter, the petitioners were issued with the notice dated 24-6-2009 proposing to levy penalty @ 25% of Rs. 8,13,343/- under section 53 (1) (ii) of AP VAT Act, 2005 on total tax of Rs.32,53,373/- Pursuant to the said notice, a reply was submitted on 10-7-2009 and the petitioners were granted personal hearing on 18-7-2009 but without considering the submissions made by the petitioner, the first respondent passed an order dated 20-7-2009. 8. Aggrieved by the same, the petitioners filed an appeal along with stay application on 25-8-2009 before the Appellate Deputy Commissioner, Hyderabad and an opportunity of personal hearing in stay petition was granted and the petitioner-company made detailed submissions. But the Appellate Deputy Commissioner rejected the contentions of the petitioners and passed an order dated 26-8-2009 rejecting the stay application towards levy of penalty of Rs. 8,13,343/- for the period 2006-07 filed by the petitioners. 9. Aggrieved by the same, the petitioner-company filed a revision before the second respondent seeking to stay the impugned order dated 26-8-2009 passed by the Appellate Deputy Commissioner, Hyderabad. But without appreciating the submissions made by the petitioner, the second respondent rejected the revision petition by an order dated 20-10-2009 except stating that the petitioner has not produced any evidence in support of the submissions, which is a regular practice of the authorities to reject the stay applications by stating that no evidence has been adduced when there is every possible piece of evidence was produced by the petitioner. 10. It is submitted by the learned counsel for the petitioner that though several contentions were raised before the Appellate Deputy Commissioner, it has refused to grant stay vide the order impugned herein. It is submitted that pursuant to the rejection of stay by the Appellate Deputy Commissioner, the respondents are contemplating to take coercive steps for recovery of the disputed tax. 11. Heard the learned counsel for the petitioner and the learned Special Standing Counsel for Commercial Taxes as well as the learned Government Pleader for Revenue. 12. In the facts and circumstances of the case, we are of the opinion that the writ petition can be disposed of at the stage of admission directing the petitioner to deposit 25% of penalty, as per the impugned order, within a period of four weeks from the date of receipt of a copy of the order but however, the respondents are directed not to take coercive step against the petitioner-company, pending finalisation of the appeal by the Appellate Deputy Commissioner Hyderabad. It is made clear that the amount paid, if any, shall be given credit to the above stipulated sum. 13. With these directions, the writ petition is disposed of at the stage of admission. However, in the circumstances there shall be no order as to costs. _____________________ Justice T.Meena Kumari ___________________________________ Justice Nooty Ramamohana Rao March 19, 2010. I s L N B : 1) Furnish CC of the order in two days. B/o. I s L THE HONOURABLE SMT. JUSTICE T. MEENA KUMARI AND THE HONOURABLE SRI JUSTICE NOORTY RAMAMOHANA RAO WRIT PETITION No. 2 4 0 8 2 OF 2009 Judgment of the Division Bench delivered by the Hon'ble Smt. Justice T. Meenakumari) Circulation Entry No. 6 2 Date: 19-03-2010 COMPUTER No. 43 Court Master: I s L