2022 (12) TMI 1376 - HC - VAT and Sales Tax

Violation of Section 79(4)(b) of the Odisha Value Added Tax Act, 2004 (OVAT Act) - specific averment of the Petitioner that the very purpose of which notice under Section 79(4) of the OVAT Act was issued by the Commissioner was already the subject matter of the appeal before the JCST, and that the Department itself could have gone in appeal against the said order under Section 78 of the OVAT Act has remained uncontroverted - HELD THAT - The present petition has been pending for over six years. In the circumstances, the Court sees no useful purpose being served in relegating the Petitioner at this stage to the Commissioner for an order on the impugned show cause notice, particularly since it appears to have been issued in violation of Section 79(4)(b) read with Section 79(5) of the OVAT Act. The counter affidavit fails to answer to the principal ground of challenge viz., that despite there being available to the Department the remedy of an appeal in terms of Section 78 of the OVAT Act, the Commissioner has chosen to exercise suo motu revisional power under Section 79 (1) of the OVAT Act. Further, there is no denial in the counter affidavit that there is statutory bar under Section 79 (4) (b) of the VSAT Act to the Commissioner exercising suo-motu revisional power since the issue was already the subject matter of an appeal. The legal position being clear, this Court quashes the impugned notice dated 11th January, 2016 and all consequential proceedings - Petition disposed off.

Summary

Issues:
Challenge to impugned notice dated 11th January, 2016 under Section 79(4)(b) of the Odisha Value Added Tax Act, 2004 (OVAT Act).

Analysis:
The judgment addresses the challenge to an impugned notice issued by the Commissioner of Commercial Taxes, Odisha, invoking the suo motu power of revision under Section 79(1) of the OVAT Act. The petitioner, a registered dealer under the OVAT Act engaged in works contracts, had an audit visit report submitted for the period 2007-2010, leading to an assessment order allowing a refund. A subsequent appeal by the petitioner was disposed of by the Joint Commissioner of Sales Tax, Balasore, reducing the refund amount. The impugned notice issued four years later alleged that the deduction allowed by the JCST was erroneous and prejudicial to revenue interests.

The petitioner argued that the notice was in violation of Section 79(4)(b) of the OVAT Act, as the issue had already been the subject of an appeal before the JCST, creating a statutory bar to the Commissioner's revisional power under Section 79(4)(b) read with Section 79(5) of the Act. The court noted that the petitioner's contention remained uncontroverted and highlighted the clear statutory limitation on the Commissioner's suo motu revisional power in such circumstances.

In response to the notice, the Department filed a counter affidavit suggesting that the petitioner should challenge any subsequent order resulting from the notice rather than approaching the court at the notice stage. However, the court emphasized that it had granted a stay on further proceedings following the notice and saw no utility in sending the petitioner back to the Commissioner after six years, especially considering the apparent violation of statutory provisions.

The court found that the counter affidavit failed to address the key challenge raised by the petitioner regarding the Commissioner's choice to exercise suo motu revisional power despite the availability of an appeal under Section 78 of the OVAT Act. The absence of a denial in the counter affidavit regarding the statutory bar under Section 79(4)(b) further supported the court's decision to quash the impugned notice and all consequential proceedings. Consequently, the order passed by the JCST was directed to be given effect in accordance with the law, leading to the disposal of the writ petition.