M/S. Sahu Enterprises vs. The Dy. Commnr. Of Sales Tax CT And GST Circle, Mayurbhanj

Facts

The Petitioner, M/s. Sahu Enterprises, Mayurbhanj, challenged an order dated 20th June, 2022, passed by the Commissioner of Sales Tax, Odisha. This order directed the Petitioner to pay 100% of the disputed demand, with the balance penalty amount to remain stayed pending the Petitioner's second appeal. The Petitioner had filed a revision petition before the Commissioner. The matter came before the High Court of Orissa at Cuttack.

Held

The Court held that the impugned order of the Commissioner of Sales Tax was not in consonance with the amended Sub-Section (6) of Section 78 of the OVAT Act. The amended provision clearly states that an appeal shall not be entertained unless accompanied by proof of payment of twenty per centum of the tax or interest in dispute. Upon such payment, the realization of the balance tax, interest, or penalty is deemed to be stayed in full until the disposal of the appeal. Therefore, the Court modified the Commissioner's order. The Petitioner was directed to deposit 20% of the disputed demand (excluding penalty), including any earlier demands, by 15th February 2023. Upon compliance, no coercive steps would be taken against the Petitioner. The issue of the exact quantum of penalty and its stay was implicitly addressed by directing deposit of 20% of the disputed demand (excluding penalty).

Key Issues

1. Whether the impugned order dated 20th June, 2022, directing the Petitioner to pay 100% of the disputed demand is sustainable in light of the amended Sub-Section (6) of Section 78 of the Odisha Value Added Tax Act, 2004 (OVAT Act)? Petitioner's contention: The Petitioner argued that the Commissioner's order was contrary to the amended provisions of Section 78(6) of the OVAT Act, which stipulates a pre-deposit of only twenty per centum of the disputed tax or interest for entertaining an appeal and staying the balance demand. Revenue's contention: The Revenue Department, through the Additional Standing Counsel, was heard by the Court. No specific argument for the Revenue was recorded in the judgment, other than their presence and representation.