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M/s. ACT Digital Home Entertainment Pvt Ltd, Rep. by its Authorized Signatory, Chandrasekhar Valluri v/s The State of Andhra Pradesh, Rep. by its Principal Secretary, Dept. of Revenue-Finance & (C.T) & Others

    Writ Petition No. 20242 of 2021

    Decided On, 16 September 2021

    At, High Court of Andhra Pradesh

    By, THE HONOURABLE MR. JUSTICE JOYMALYA BAGCHI & THE HONOURABLE MRS. JUSTICE KONGARA VIJAYA LAKSHMI

    For the Petitioner: Karan Talwar, Advocate. For the Respondents: G.P. for Commercial Taxes.



Judgment Text

(Taken up through video conferencing)

Joymalya Bagchi, J.

1. CTD Order No.ACO ZH370921OD74829 passed by the Additional Commissioner (CT), Legal, Office of the Commissioner of Commercial Taxes, Edupugallu in CCT’s Reference No.LII(1)/54/2021, dated 31.8.2021, refusing to stay the recovery of the disputed penalty pending the appeal before respondent No.4 – The Appellate Deputy Commissioner (ST), Vijayawada, has been assailed in this writ petition.

2. Learned counsel appearing for the petitioner submits that the penalty order was passed without considering that the assessment order was under challenge, inter alia, on the ground that adequate opportunity of hearing had not been given to the petitioner at the time of assessment. Referring to Sri Dedeepriya Paints v. Deputy Commercial Tax Officer – I[2019] 107 taxmann.com 377 (Andhra Pradesh & Telangana), the petitioner submits as the pre-deposit of 12.5% of the penalty has been made, the realization of the remainder penalty pending appeal ought to be automatically suspended. He further submits that the said order was upheld by the Apex Court in Deputy Commercial Tax Officer-I v. Sri Dedeepriya Paints [2019] 107 taxmann.com 378 (SC).

3. On the other hand, Mr. Rajesh, learned Government Pleader for Commercial Taxes appearing for the respondents, submits that in the aforesaid case, the Bench did not consider the provisions of Section 31(3)(a) and (b) of the Andhra Pradesh Value Added Tax Act, 2005 (for short, “A.P.VAT Act”). The said provisions give discretion to the appellate authority as well as to the revisional authority to consider prayer for stay of collection of balance of the tax/penalty under dispute pending disposal of the appeal and pass appropriate orders thereon in accordance with law.

4. We have considered the submissions of the parties. At the outset, we propose to deal with the submissions of the petitioner whether in Sri Dedeepriya Paints’s case (1 cited supra), this Court has laid down an axiomatic proposition that on pre-deposit of 12.5% of the tax/penalty as a condition precedent for filing appeal under Section 31(1) of the A.P.VAT Act, the realization of the remainder tax/penalty in dispute would be automatically suspended. We have read the judgment as a whole. The Bench, after considering the facts of the case, inter alia observed as follows:

“We are therefore of the opinion that the impugned order suffers on counts more than one. When the petitioner concern already paid 12.5% of the disputed tax amount for the purpose of maintaining an appeal as required by law, it would be wholly unjust for the tax authorities to demand the balance of the disputed tax amount notwithstanding the pendency of the appeal.”

5. The aforesaid observation was made by the Bench in the factual matrix of the case wherein the revisional authority had mechanically applied the ratio in Assistant Collector of Central Excise v. Dunlop India Ltd (1984 taxmann.com 492)without considering the distinguishing factors pleaded by the petitioner concerned. By no stretch of imagination, the said observation can be said to have crystalised as a rule of law that pre-deposit of 12.5% of the disputed tax and penalty would automatically suspend the realization of the remainder tax liability. It may me apposite to note that the attention of the Bench had not been drawn to Section 31(3)(a) & (b) of the A.P.VAT Act, which reads as follows:

“31. Appeal to Appellate Authority:

(1)…………..

(2)…………..

(3)(a) Where an appeal is admitted under sub-section (1), the appellate authority may, on an application filed by the appellant and subject to furnishing of such security or on payment of such part of the disputed tax within such time as may be specified, order stay of collection of balance of the tax under dispute pending disposal of the appeal;

(b) Against an order passed by the appellate authority refusing to order stay under clause (a), the appellant may prefer a revision petition within thirty days from the date of the order of such refusal to the Additional Commissioner or the Joint Commissioner who may subject to such terms and conditions as he may think fit, order stay of collection of balance of the tax under dispute pending disposal of the appeal by the appellate authority.

(c)………….

(4)………….

(a)………….

(b)………….

(c)………….

(5)………….

(6)………….”

6. If the argument of the learned counsel is accepted, then, the aforesaid provisions giving discretionary power to the appellate authority and thereafter, to the revisional authority to stay the collection of balance tax/penalty in dispute pending hearing of the appeal, would become otiose. Furthermore, the Special Leave Petition against the aforesaid judgment was dismissed in limini and therefore, no declaration of law can be said to have been made by the Apex Court on this score.

7. On the other hand, another coordinate Bench of this Court, in M/s. HCV Digital Entertainment Private Limited vs. The State of Andhra Pradesh (W.P.No.10762 of 2018 decided on 3.4.2018), while dealing with stay applications pending appeal under Section 31(1) of the A.P.VAT Act, held as follows:

“In matters of similar nature, this Court granted stay on condition that 25% of the disputed tax is paid. Therefore, following the same, the writ petition is disposed of granting an interim stay of collection of the balance of disputed tax, pending disposal of the first appeal, subject to the condition that the petitioner deposits 25% of the disputed tax, less the amount already paid, within a period of three weeks from the date of receipt of a copy of this order. There shall be no order as to costs.”

8. Thus, we are unable to read a binding precedent declared in Sri Dedeepriya Paints’s case (1 cited supra) that pre-deposit of 12.5% of the tax/penalty in dispute for the institution of the appeal, would automatically suspend the realization of the remainder of tax/penalty in dispute.

9. However, we find merit in the submission of the petitioner that since the appeal against the assessment order is pending, which according to the petitioner was passed during pandemic conditions without adequate opportunity being given to the petitioner to place relevant records before the assessing

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officer, as contended in the appeal proceeding, we are of the opinion an arguable case has been made out in his favour and an order of stay of collection of the remaining penalty ought to have been passed on conditions. Hence, we set aside the impugned order and direct upon deposit of 25% of the disputed penalty after adjusting the amount already deposited within a period of four (4) weeks from date, there shall be suspension of realization of the remainder of the disputed penalty till the disposal of the appeal. 10. Accordingly, the Writ Petition is allowed. There shall be no order as to costs. As a sequel, Miscellaneous Petitions, if any, pending in this Writ Petition shall stand closed.
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