IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE FIFTH 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 5 7 8 6 of 2009 Between: M/s. Hydro Pneumatics, H.No. 28-9-86, Suryabaugh, Visakhapatnam, Represented by its Partner, Sri N.A. Badri ..... PETITIONER V/s. The Joint Commissioner (CT) Legal, Andhra Pradesh, Hyderabad & 2-Ors. .....RESPONDENTS Counsel for the Petitioner : Sri Sshaik Jeelani Basha Counsel for the Respondents: Sri P.Balaji Varma Spl. S.C. for C.T. The Division Bench made the following Order : (Order follows 2nd page) THE HON'BLE SMT. JUSTICE T.MEENA KUMARI AND THE HON'BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION No. 2 5 7 8 6 of 2009 ORAL ORDER : (Per THE HON’BLE MRS. JUSTICE T.MEENA KUMARI) Seeking mandamus to declare the action of the first respondent in rejecting the stay application by proceedings dated 20- 10-2009 in CCT’s Ref.No.LV (3)/555/2009 as arbitrary, contrary to law and consequent to grant stay of collection of balance disputed tax of Rs.1,61,855-00 out of the total disputed tax of Rs. 11,16,539-00 for the assessment year 2004-05 before the first respondent, pending disposal of the appeal before the Sales Tax Appellate Tribunal, Additional Bench, Visakhapatnam and to pass such other suitable orders as this Court may deems fit and proper in the circumstances of the case, the present writ petition is filed. 2. M/s. Hydro Pneumatics, a partnership firm is carrying on business in Industrial Valves and Diesel Generator Sets and it is a registered dealer on the rolls of the third respondent under the AP VAT Act. The third respondent completed the assessment through proceedings dated 31-3-2008 levying tax @ 12% on the sales turnover of Rs.32,69,090/- not covered by ‘G/N’ forms and on first sales of valves, rubber goods, diesel generator sets etc., on a turnover of Rs.1,03,14,785-00 respectively. Aggrieved thereby, the petitioner filed an appeal before the Appellate Deputy Commissioner (CT), Visakhapatnam under section 19 of the Act. Thereafter, the Appellate Deputy Commissioner through proceedings dated 09-4- 2009 remitted the matter to the assessing authority with a direction to verify ‘N’ forms in original as well as purchase invoices. The contention of the petitioner before the first appellate authority was that the valves are safety protection devices and are installed on chambers like pipeline, tanks etc., for carrying fluid or gases or steam. But the main function of valve is to relieve any excess pressure, which may build within the chamber. Therefore, the valves are parts or accessories of machineries and liable to tax @ 8% falling under entry 83 of Schedule-I of APGST Act, 1957 and relied on a decision of Tamilandu Taxation Special Tribunal in RE-MOORCO (India) LIMITED V/s. STATE OF TAMILNADU-120STC-388. It is stated that the Commercial Tax Officer had restricted the second sales at Rs.99,72,378-00 and brought a turnover of Rs.85,57,268/- to tax treating it as first sales turnover and levied tax @ 12%. Hence, levying Rs.85,57,268/- should be ‘TOT’ but not as first sales and the assessing authority ought to have passed the final assessment order by allowing time to produce G/N forms. It is further stated that the Appellate Deputy Commissioner while disposing of the appeal has observed that the valves falls under item 83 of Schedule-I and liable to tax @ 8% treating the same as machinery parts. 3. It is stated that the third respondent after following the directions of the Appellate Deputy Commissioner passed consequential orders dated 15-4-2009 stating that “verified the N form declarations and purchase bills” filed by the dealer and found to be in order. However, the third respondent levied tax on a turnover of Rs.18,37,311-00 as not covered by “N” form declarations. The third respondent arrived fresh demand of Rs.259/- in the said consequential order, which was paid by the petitioner on 08-5-2009 itself. It is further stated that the second respondent while acting under Revisional Powers under section 20 (2) of the APGST Act proposed to revise the assessment vide notice dated 12-8-2008 holding that on scrutiny of the assessment record, it is noticed that the assessment order passed by the Commercial Tax Officer, Suryabaugh, Visakhapatnam is not based on proper appreciation of statute and that it is observed from the assessment record that the exempted turnover consists of inter-state sales to an extent of Rs.50,69,590-/- and second sales turnover to an extent of Rs.99,72,878/- and the assessing authority allowed exemption on this turnover on the strength of Form “E” returns. Further on scrutiny of the purchase details, it appears that the purchases are related to inter-state, which were wrongly included in Form “E” returns and claimed exemption on the relevant sale value. The sale value of the purchases of Rs.13,53,176/- is exigible to tax at the hands of the assessee. Therefore, the third respondenet had erroneously allowed exemption on the turnover of Rs.99,72,878/-. Therefore, the orders passed by the Commercial Tax Officer for the year 2004-05 under APGST Act are prima facie found to be incorrect, improper and prejudicial to the interest of State Revenue. Pursuant to the orders passed by the second respondent, dated 03-6-2009, the third respondent passed consequential orders dated 08-6-2009 raising a balance demand of Rs.11,16,530/- without even noticing his earlier proceedings dated 15-4-2009 wherein the balance demand shown as Rs.259/-. 4. Aggrieved by the orders passed by the second respondent, the petitioner preferred an appeal before the Sales Tax Appellate Tribunal, Additional Bench, Visakhapatnam, on 09-6-2009 and also an application before the first respondent on 31-8-2009 seeking stay of collection of disputed balance demand of Rs.11,16,539/-. But however, the first respondent rejected the stay petition by orders dated 20-10-2009 without considering all the contentions raised by the petitioner. Pursuant to the rejection proceedings passed by the first respondent, the third respondent is threatening to take coercive steps for recovery of the disputed demand. 5. It is submitted by the learned counsel for the petitioner that though several contentions were raised before the first respondent, the first respondent has refused to stay collection of disputed demand of Rs.11,16,539/-. It is submitted that pursuant to the rejection of stay by the first respondent, the third respondent is contemplating coercive steps for recovery of the disputed tax. 6. Heard the learned counsel for the petitioner and the learned Special Standing Counsel for Commercial Taxes. 7. 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 50% of the disputed tax, as per the impugned order in addition to the amount already paid, preferably within a period of four weeks from today i.e., 05-03- 2010 and the respondents are directed not to take coercive step for recovery of the balance disputed tax, pending finalisation of the appeal by the Appellate Tribunal. It is made clear that the amount paid, if any, shall be given credit to the above stipulated sum. 8. With the above directions, the writ petition is disposed of at the stage of admission. No order as to costs. _____________________ Justice T.Meena Kumari ___________________________________ Justice Nooty Ramamohana Rao March 5, 2010. I s L NB: Furnish CC. 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 5 7 8 6 OF 2009 Judgment of the Division Bench delivered by the Hon'ble Smt. Justice T. Meenakumari) Circulation Entry No. 9 7 Date: 05-03-2010 COMPUTER No. 43 Court Master: I s L