M/s S.V.E.C. Constructions Limited v. Joint Assistant Commissioner (CT), VAT Management Unit-II, Abids Division, Hyderabad & Ors.

(Per the Hon’ble Mrs. Justice T. Meena Kumari) This writ petition is filed seeking issuance of a writ of certiorari quashing the order of the 3rd respondent in L(1)/834/2007 dated

7.12.2007 as illegal, arbitrary and contrary to law and consequently to restrain the 1st respondent from taking any coercive steps for collection of balance disputed tax of Rs.5,66,503/- out of total disputed tax of Rs.11,65,935/- for the assessment years 2005-06 and 2006-07 (up to July 2006) pending disposal of the appeal before the 2nd respondent under the Andhra Pradesh Value Added Tax Act, 2005. The petitioner-M/s S.V.E.C. Constructions Limited, is a registered dealer on the rolls of the Commercial Tax Officer, Nampally Circle, Hyderabad under the Andhra Pradesh Value Added Tax Act, 2005 (for short, “the Act”). It is engaged in the business of execution of work- contracts and for the said purpose, purchases goods from outside the State of Andhra Pradesh as well as locally from unregistered and registered dealers. During the course of its business, the petitioner purchased granite for incorporation in the works executed by it. The petitioner filed returns under the Act reporting the turnover of goods used in execution of work-contracts. The petitioner paid tax at 4% on granite under Item 43 of IV Schedule to the Act. While so, the 1st respondent-Assistant Commissioner (CT) A.P. Value Added Tax Act, 2005, Management Unit-II, Abids Division, Hyderabad, after scrutiny of the accounts maintained by the petitioner for the assessment years 2005-06 and 2006-07 (upto July, 2006), levied tax on the value of goods used in works-contract at 12.5%. The 1st respondent also levied tax on boulders at 4% under Entry 92 of IV Scheduled to the Act. While passing the assessment order dated

6.10.2006, the 1st respondent did not give credit to the amounts of Rs.3,44,554/- paid by the petitioner towards TDS for the year 2005-06 and Rs.2,21,949/- collected by the Deputy Commercial Tax Officer at the time of inspection.

Aggrieved by the order of the 1st respondent, the petitioner filed an Appeal on 22.9.2007 before the 2nd respondent along with an application for stay of collection of balance disputed tax contending that the granites are liable to tax at 4% under Item 43 of IV Schedule to the Act and the decision of Advance Ruling Authority in CCT’s Ref. No.PMT/P&L/A.R.Com/34/2005, dated 21.7.2005 has no bearing to the petitioner’s case since the petitioner was not put on notice regarding the said ruling and no opportunity was afforded to it in that context. It was further contended that there was a missing credit of Rs.2,21,949/-, which was paid by the petitioner at the time of inspection, and further an amount of Rs.3,44,554/-, which was deducted at source during the year 2005-06 was also not given credit to. It was also contended that the disputed tax in the Appeal is Rs.11,65,935/- and the petitioner paid the admitted tax of about Rs.13.00 lakhs before filing the Appeal.

It is contended that the petitioner paid a further sum of Rs.1,45,742/- on 7.11.2006 towards the disputed tax for the entire period and for the balance disputed tax of Rs.10,20,193/-, it filed an application seeking stay of collection of balance disputed tax. The petitioner contended that the 2nd respondent by order dated 28.9.2007 refused to grant stay. Against the order of the 2nd respondent, the petitioner filed Revision Petition before the 3rd respondent on 29.10.2007. However, the 3rd respondent also by order dated 7.12.2007 refused to grant stay. As there was severe pressure from the assessing authority pursuant to the order of the 2nd respondent refusing to grant stay, the petitioner paid a further sum of Rs.4,53,690/-. Hence, this writ petition. Having heard the learned Counsel for the petitioner as well as the Special Standing Counsel for Commercial Taxes appearing for the respondents and in view of the fact that the Revision preferred by the petitioner is pending before the 2nd respondent, we are of the opinion that interests of justice would be adequately met if stay is granted pending Revision subject to certain conditions.