THE HON’BLE SRI JUSTICE T. VINOD KUMAR And THE HON’BLE SMT. JUSTICE P.SREE SUDHA WRIT PETITION No.16153 of 2006 ORDER: (Per Hon’ble Sri Justice T.Vinod Kumar Heard learned counsel for the petitioner and learned Special Standing Counsel for Commercial Taxes appearing on behalf of respondents, and perused the record.

2. The case of the petitioner in brief is that it was assessed to tax by the 1^st respondent for the assessment year 2001-02 under the Andhra Pradesh General Sales Tax Act, 1957 ( for short ‘the Act’) vide Assessment Order dated 10-03-2005 determining the tax payable in a sum of Rs.96,15,08,110/- and after giving credit to the tax paid by the petitioner in a sum of Rs.94,90,83,353/-, had issued demand notice in form B-3 for balance tax of Rs.1,24,24,757/-.

3. It is the further case of the petitioner that since the aforesaid order of assessment did not give credit to the amounts of tax paid by the petitioner on 18-07-2002 in a sum of Rs.89,75,585/-, the 1^st respondent authority exercising power under Rule 50 of the APGST Rules had issued rectification of assessment order dated

07-04-2005 giving credit to the aforesaid amounts paid resulting in reduction of balance tax payable in a sum of Rs.34,49,172/-.

4. It is the further case of the petitioner that on the 1^st respondent authority issuing the rectification order reducing the balance tax demand, it was issued with proceedings dated 29-05-2006 levying interest in a sum of Rs.43,74,102/- for a period of 3 months 11 days @ 30% p.a. on the payment of Rs.89,75,585/- and interest amounting to Rs.7,52,474/- and for 2 years 11 months @ 36% p.a. amounting to Rs.36,21,628/-.

5. Petitioner further contends that the 1^st respondent adopted the rate of interest as prescribed under Section 16(3) of the Act that prevailed prior to 12-01-2005 even though the said rate was substituted by Act No.2 of 2005 with uniform rate of 12% per annum.

6. Petitioner further contends that the Act was repealed and in its place Andhra Pradesh Value Added Tax Act (for short ‘VAT Act’) has come into force w.e.f. 01-04-2005 and even under the VAT Act, the rate of interest is specified as 1% per month under Section 22(2) of the VAT Act, which works out to 12% p.a. and as such, the impugned order dated 29-05-2006 passed by the

1^st respondent is without jurisdiction and violative of principles of natural justice.

7. Counter-affidavit on behalf of 1^st respondent is filed.

8. By the counter-affidavit, it is contended that the Assessment period involved is 2001-02 of the Act and rate of interest prevalent at the relevant point of time is prescribed under Section 16(3)(a) of the Act ranging from 18% p.a. to 36% p.a. for the period of delay.

9. By the counter-affidavit, it is further contended that the rate of interest was amended as per Act 2 of 2005 to 12% p.a. w.e.f.

12-01-2005 to 31-03-2005.

10. It is further also contended that though, the proceedings for levy of interest are initiated in the year 2006, the rate of interest applicable would be the rate as existing during the relevant period i.e. 2001-02, but not the rate of interest as applicable on the date on which the proceedings have been initiated.

11. By the counter-affidavit, it is further contended that since, the petitioner had made payment of Rs.89,75,585/- on 18-07-2002, the interest has been calculated only for the period of delay in making payment after the end of the assessment year

2001-02 viz., April to March.

12. By the counter-affidavit, it is further contended that since, the petitioner did not make the balance payment of Rs.34,49,172/-, the 1^st respondent authority had levied interest at the maximum prescribed under Section 16(3)(a) of the Act.

13. By the counter-affidavit, it is further contended that since, the tax due relates to the period 2001-02, the petitioner cannot claim the interest @ 12% p.a. as introduced by Act 2 of 2005 which would be applicable only in relation to tax dues for the period 12-01-2005 to 31-03-205 on which date the Act wa