THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.11206 of 2011 April 26, 2011 Between: M/s.Sai Vaccine Stores, MSR Complex, Kothapet, Guntur represented by its Managing Partner, Mr.Ch.Ravi Babu … Petitioner And The Joint Commissioner (CT) Legal, Andhra Pradesh, Hyderabad And others … Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.11206 of 2011 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioner is a firm carrying on business in drugs and medicines. The firm is a dealer under the Andhra Pradesh Value Added Tax Act, 2005 (the VAT Act) on the rolls of the third respondent. The books of accounts for the period from September, 2008 to August, 2009 were subjected to audit by the second respondent as authorized by the jurisdictional Deputy Commissioner. The audit lead to assessment of the turnover of Rs.1,04,62,142/- towards sale of as many as eight kinds of drugs and vaccines which, according to the petitioner, are blood plasma components. The petitioner contended that, being blood plasma products, they are exempted under Entry 22 of the Schedule I to the VAT Act. The second respondent, however, assessed the turnover @ 4% VAT rate treating them as the products falling under Entry 88 of Schedule IV. The petitioner unsuccessfully preferred an appeal before the Appellate Deputy Commissioner and, thereafter, filed an appeal under Section 33(1) of the VAT Act before the Sales Tax Appellate Tribunal (STAT), Visakhapatnam Bench which is pending. The petitioner alleges that he paid the tax as assessed by the second respondent. Be that as it is, the second respondent also passed an order dated 27.8.2010 levying penalty. Again the petitioner unsuccessfully preferred an appeal before the first appellate authority and, thereafter, when he was taking necessary steps for filing an appeal, before the STAT, the second respondent issued notice under Section 29 of the VAT Act on 28.3.2011. The petitioner approached the first respondent under Section 33(6)(a) of the VAT Act seeking stay of collection of the disputed penalty of Rs.4,18,486/- pending appeal before the STAT. By impugned order dated 15.4.2011 the application was dismissed. The Counsel for the petitioner submits that the products fall under Entry 22 of the Schedule I and, therefore, the assessment as well as the penalty by the first respondent is ex facie illegal. According to the Counsel, they cannot be treated as drugs and medicines falling under Entry 88 of Schedule IV. He nextly submits that it is unfair on the part of the second respondent to issue garnishee notice even after expiry of the period of appeal, and as a fact the petitioner has already submitted appeal to the STAT. Lastly he would submit that levy of penalty is itself unwarranted. During the audit, the second respondent unearthed the petitioner’s turnover towards sale of (1) Kamrab-300 1 U (Rabies Immune globulin Human EP), (2) Tetig-500 1 U (Human ant tetanus immunoglobulin), (3) Rhogam u 1tva – Filterved plus Rho (d) Immune Glolbulin (Human), (4) Microgram Filterved plus Rho, (5) Iviglob (Immunoglobulin for Intravenous use B.P. (Human), (6) Hep big-5 Hepatities B Immuno globalin (Human) E.P., (7) Hepatities-B Immune Globulin (Human), (8) Elgam Immunoglobulin (PH4). The petitioner contends that they fall under Entry 22 of the Schedule I in which case by reason of Section 7 of the VAT Act, they are liable to be exempted from tax. The assessing officer as well as the appellate authority came to the conclusion that blood components are not exempted under the VAT Act and that it is only blood and blood plasma that can be exempted. Entry 22 of the Schedule I deals with “human blood and blood plasma” whereas Entry 88 of the Schedule IV attracting the VAT rate of 4% deals with “Drugs & Medicines”, whether patent or proprietary, as defined in clauses (i), (ii) and (iii) of Section 3(b) of the 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:- (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”. The petitioner also deals with various types of vaccines. The second respondent considered the turnover for the sale of eight products named hereinabove as drugs. Prima facie the conclusion appears to be correct because, as per Entry 22 of the Schedule I, what is exempted is only “human blood and blood plasma”. Even if the eight products are blood components, as alleged by the petitioner, they would not, on a plain understanding of Entry 22 of the Schedule I, fall thereunder. While rejecting the application for stay the first respondent observed that all the drugs are different vaccines and antibodies and they cannot be treated as blood plasma. As the substantive appeal is pending before the STAT, we would not venture into deeper analysis of this aspect of the matter. After giving anxious consideration, we are convinced that this is not a case where we should interfere especially when the impugned order is a discretionary order passed under Section 33(6)(a) of the VAT Act. In the result, the writ petition is dismissed in limine, without any order as to costs. _______________ (V.V.S.RAO, J) ______________________________ (RAMESH RANGANATHAN, J) April , 2011 YS