Orissa High Court
Unknown vs State Of on 21 January, 2021
W.P.(C) No. 28500 of 2020
05. 21.01.2021 1. This matter is taken up by video conferencing mode.
2. Heard Mr. Saswat Kumar Acharya, learned Counsel for the
Petitioner and Smt. Suman Pattanayak, learned Additional
Government Advocate for the State-Opposite Parties.
3. This petition has a long history. The Petitioner is involved in the
business of export of iron ore and specializes in providing services
of drilling, raising, screening, sizing and stacking etc. of iron ores.
It is a registered service provider under the Finance Act, 1994.
4. Although the Petitioner has been regularly filing both value
added tax (VAT) and service tax returns and also paying the taxes
as and when due, the Petitioner was issued a notice in Form- VAT-
401, on 27th June, 2013 by the Sales Tax Officer. Subsequently, the
Deputy Commissioner of Sales Tax issued a notice under Section
43 of the Odisha Value Added Tax Act, 2004 ('OVAT Act') for
reassessment of the tax for the year 1st April, 2008 till 31st July,
2013.
5. The stand taken by the Petitioner in response thereto, on the basis
of the Judgment of the Supreme Court in Imagic Creative Pvt. Ltd.
v. Commissioner of Commercial Taxes (2008) 12 VST 371 (SC)
was that the payment of service tax and VAT are mutually
exclusive. Therefore, having paid service tax, the Petitioner is not
liable to pay any VAT on the same transaction.
6. However, this submission was negatived and an assessment
order was passed on 31st January, 2014 imposing VAT of
Rs.95,46,402/- and penalty of Rs.19,09,28,044/-, treating the ervice
as a transfer of 'right to use' and therefore amenable to VAT.
7. For the purpose of the present petition, it is not necessary to refer
to all the petitions filed by the Petitioner in this Court. It is
sufficient to notice that the Petitioner was, by those orders relegated
to the statutory remedies for challenging the aforementioned
assessment order. The First Appeal filed by the Petitioner under the
OVAT Act was dismissed on 29th September, 2014 by the First
Appellate Authority. Against that order, the Petitioner filed a
Second Appeal before the Odisha Sales Tax Tribunal (OST) on 19th
August, 2019. The said appeal has been registered as S.A.
No.160(V)/2019.
8. The Petitioner points out that, at the time of filing of the First
Appeal itself, 10% of the tax demand was already collected as pre-
deposit from it by the Deputy Commissioner of Sales Tax. Now,
after filing the Second Appeal, the Petitioner received a defect
notice dated 23rd October, 2019 from the OST requiring the
Petitioner to pay another 10% of the demanded amount in terms of
the amended Section-78 (6) of the OVAT Act.
9. It is in the above background that the Petitioner has approached
this Court with the present petition. The case of the Petitioner is
that the amendment to Section 78 of the OVAT Act came into force
only on 21st June, 2017 whereas the assessment order is dated 31st
January 2014 and the First Appellate Order is dated 29th September,
2014. The right to file appeal against the First Appellate
Authority's order, therefore, accrued to the Petitioner prior to
coming into force of the amendment to Section 78 of the OVAT
Act, which required 20% of the tax to be deposited for an appeal to
be maintainable before the OST.
10. In support of the above proposition, Mr. S.K.Acharya, learned
counsel for the Petitioner has placed reliance on the decision 28th
September, 2018 of the Nagpur Bench of the Bombay High Court
in Appeal No.2 of 2018 (Anshul Impex Pvt. Ltd. vs. State of
Maharashtra). It is stated that by order dated 11th March 2019, the
Supreme Court of India dismissed the Special Leave Petition filed
against the said Judgment. It is accordingly contended by Mr.
Acharya that the OST should be directed to hear the Petitioner's
appeal without insisting on a further 10% pre-deposit, by treating
the amended Section 78 (6) of the OVAT Act to be prospective.
11. Mr. S. Mishra, learned Standing Counsel for the Opposite
Parties, on the other hand, submits that, at the time of filing of the
second appeal, the amended Section 78 (6) OVAT Act had already
came into force. Therefore, the OST was acting within the four
corners of the law in insisting on the further 10% pre-deposit.
12. Mr. Acharya points out that, there are orders of the OST itself
in similar cases where the plea that service tax and VAT are
exclusive has been accepted. He referred to the order dated 7th
December, 2017 of the OST in S.A. No.240(V)/2014-2015 (M/s.
Emar Mining & Construction Pvt. Ltd. v. State of Odisha) and
another order in the Petitioner's own case in S.A. No.64 (V)/2012-
2013.
13. Having considered the above submissions, it appears to this
Court that it would be appropriate to direct the OST to take up
hearing of the Petitioner's appeal No.160(V)/2019 without insisting
on the further 10% pre-deposit by the Petitioner. It is ordered
accordingly. The OST would examine the question whether in the
light of the judgment of the Bombay High Court in Anshul Impex
(supra), the Petitioner's contention that the amendment to Section
78 (6) of the OVAT Act would apply prospectively is legally
tenable. The OST would proceed to hear the Petitioner's Second
Appeal on merits on all the grounds urged therein and dispose it of
by a reasoned order not later than 5th July, 2021. Till then, no
coercive steps shall be taken against the Petitioner.
14. Any observation made by this Court in the present order is not
to be treated as the expression of any final view on the respective
contentions of the parties. The OST will decide the appeal
independent thereof.
15. The petition is disposed of in the above terms.
16. As restrictions due to the COVID-19 situation are continuing,
learned counsel for the parties may utilize a soft copy of this order
available in the High Court's website or print out thereof at part
with certified copy in the manner prescribed, vide Court's Notice
No.4587, dated 25th March, 2020.
( Dr. S. Muralidhar )
Chief Justice
(C.R. Dash)
S. Mohanty/L. Murmu Judge
