Allowed

M/s.Iris Cybertech Ltd, v. The Commercial Tax Officer

Telangana HC9 Oct 2012WP/31149/2012

Case brief

AI extract

What is this about?

In a writ petition challenging an order by a Commercial Tax Officer granting a stay on disputed tax and penalty, the High Court held the Officer lacked jurisdiction under the AP VAT Act. However, finding the petitioner had deposited substantial amounts, the Court directed respondents not to take coercive recovery steps pending appellate outcomes.

What did the court decide?

Set aside the order dated 29-8-2012 and directed respondents not to take coercive steps for recovery of disputed tax and penalty pending disposal of appeals before the STAT.

M/s.Iris Cybertech Ltd, Vs The Commercial Tax Officer — Banking and Recovery | Telangana HC (2012)

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THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO

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Writ Petition No. 31149 of 2012

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Dated: 09-10-2012

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Between:

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M/s IRIS Cybertech Ltd. rep. by its Director Mr.K.Poornachandra Rao. …Petitioner And The Commercial Tax Officer, Srinagar Colony Circle, Hyderabad and others.

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…Respondents.

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THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO

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Writ Petition No. 31149 of 2012

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Oral order (Per Hon’ble Sri Justice Goda Raghuram)

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Heard the learned counsel for the petitioner Sri Bhaskar Reddy Vemireddy and Sri B.Venkatadri, learned Standing Counsel for Commercial taxes.

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The order dated 29-9-2012 passed by the 3^rd respondent granting a conditional stay for collection of the disputed penalties (Rs.55,78,418/- for the year 2005-06; Rs.53,29,382/- for 2006-07; and Rs.1,54,713/- for 2007-08) and tax of Rs.6,19,853/- for 2007-08, under the AP VAT Act, 2005, on condition that the petitioner-appellant deposits 50 per cent of the total demand after taking credit for amounts already paid, on or before 29-9-2012, this writ petition is filed. The petitioner is a registered dealer both under the provisions of the AP VAT Act, 2005 and the CST Act, 1956 and is an assessee on the rolls of the 1^st respondent. For the Assessment Years 2005-06, 2006-07 and 2007-08 the petitioner filed its monthly returns and paid the tax on that basis.

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Thereafter the 1^st respondent conducted an audit and passed an order dated 20-11-2008 and for the Assessment Years 2005-06 and 2006-07 rejected the claim of input tax credit. This resulted in a tax liability of Rs.27,87,209/- for 2005-06 and Rs.26,64,191/- for 2006-07. On 14-10-2009 the 1^st respondent passed orders for the Assessment Year 2007-08 again rejecting the claim for input tax. This resulted in a

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demand of Rs.6,18,853/-. The 1^st respondent also passed orders levying penalty and interest vide proceedings dated 26-11-2009 for 2005-06 and 2006-07 and dated 2-3-2010 for the Assessment Year 2007-08. Challenging the orders of Assessment and levy of penalty and interest for the three years in question the petitioner filed separate appeals before the 2^nd respondent challenging the rejection of its claim for input tax credit. The 2^nd respondent dismissed the appeals in so far as levy of tax is concerned for the three years in question vide proceedings dated 16-2-2009. Aggrieved, the petitioner preferred further appeals before the STAT which are stated to be pending. Pending the appeals before the STAT the petitioner approached this Court by way of W.P.Nos. 10658 and 10659 of 2009 seeking stay of collection of the balance disputed tax when the 3^rd respondent rejected the application for stay preferred by the petitioner after preferring the appeals to the STAT. This Court by the order dated 285-2009 disposed of W.P.Nos. 10658 and 10659 of 2009 granting stay of recovery of the disputed tax on condition that the petitioner deposits 50 per cent of the disputed tax within the time stipulated. This conditional order of the High Court in the writ petitions have been complied with by the petitioner.

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As the 3^rd respondent issued notice demanding payment of the disputed amount for the three years in question, the petitioner again approached this Court by way of W.P.Nos. 6396 to 6400 of 2010 wherein stay of recovery of the disputed tax/penalty/interest was granted (for the three years in question) on condition that the petitioner deposits a consolidated amount of Rs.20.00 lakhs within the time stipulated. This order was passed on 25-3-2010 by this Court and the petitioner states to have complied with the order by deposit of Rs.20.00 lakhs.

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While so the 2^nd respondent by its order dated 12-4-2012 dismissed the appeals preferred by the petitioner challenging the levy

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of penalty for the three Assessment Years in question; by orders dated 27-12-2011 dismissed the appeals preferred challenging the levy of tax for the Assessment Year 2007-08. The 2^nd respondent set aside the orders passed by the 1^st respondent and remanded the appeals preferred by the petitioner against levy of interest for the Assessment Years 2005-06 and 2006-07, vide orders dated 12-4-2012.

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In the circumstances above and on inadequate legal advise and since in view of the dismissal of the appeals by the 2^nd respondent, coercive steps were being initiated for levy of tax and penalty in view of the dismissal of the petitioner’s appeals by the 2^nd respondent, the petitioner approached the 3^rd respondent seeking stay of levy of the disputed quantum of tax and penalty. In this application of the petitioner, the impugned order dated 29-8-2012 was passed by the 3^rd respondent.

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It is stated by Sri Bhaskar Reddy, the learned counsel that the petitioner was remiss in approaching the 3^rd respondent as the 3^rd respondent had no jurisdiction to entertain an application for grant of stay of collection of tax and penalty, since on the earlier occasion the 3^rd respondent had not granted stay during the pendency of the appeals before the Appellate Authority (the Appellate Deputy Commissioner), in view of the provisions of Section 31 (3)(c) of the 2005 Act.

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It is the contention of Sri Bhaskar Reddy that since the petitioner had deposited 50 per cent of the disputed tax pursuant to the orders of this Court dated 28-5-2009 in W.P.Nos. 10658 and 10659 of 2009 and has deposited a further amount of Rs.20.00 lakhs pursuant to the orders of this Court dated 25-3-2010 in W.P.Nos. 6396 to 6400 of 2010; and has also deposited 50 per cent of the disputed tax while preferring an appeal before the Appellate Deputy Commissioner and the STAT, a substantial amount of the disputed tax liability, consequent on the appellate order of the 2^nd respondent has been

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deposited and in the circumstances and particularly since the 3^rd respondent had no jurisdiction to pass the impugned order dated 29-82012, relief should be granted to the petitioner by stay of collection of the disputed amounts of tax and penalty for the Assessment Years 2005-06, 2006-07 and 2007-08, pending disposal of the appeals preferred by the petitioner to the STAT, Hyderabad.

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From the chronology of events mentioned above, it is seen that in respect of the Assessment Years 2005-06 and 2006-07, the petitioner has deposited in all 50 per cent of the disputed tax while preferring appeals before the Appellate Deputy Commissioner and the STAT; it is stated by Sri Bhaskar Reddy that in respect of the Assessment Year 2007-08 the tax liability assessed is Rs.6,18,853/- of which 12.5 per cent was deposited while preferring an appeal before the Appellate Deputy Commissioner and the petitioner would in any case be liable to deposit 37.5 per cent while preferring an appeal to the STAT which is unavoidable. In addition, the petitioner has deposited Rs.20.00 lakhs pursuant to the order of this Court dated 25-3-2010 in W.P.Nos. 6396 to 6400 of 2010.

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In the circumstances above we consider it just and proper, while setting aside the order dated 29-8-2012 passed by the 3^rd respondent, to direct the respondents not to take any coercive steps against the petitioner for recovery of the balance outstanding disputed tax and penalty in respect of the Assessment Years 2005-06, 2006-07 and 2007-08, pending disposal of the appeals preferred by the petitioner, by the STAT, Hyderabad.

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The writ petition is disposed of as above. But in the circumstances without costs.

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_________________________ GODA RAGHURAM, J

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9^th October, 2012

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_______________________________ M.S.RAMACHANDRA RAO, J

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GRR

M/s.Iris Cybertech Ltd, v. The Commercial Tax Officer

Case brief

What is this about?

What did the court decide?

M/s.Iris Cybertech Ltd, v. The Commercial Tax Officer

Case brief

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What did the court decide?

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