M/S. A.K.Das Associates LTD. vs. The Commissioner Of Sales Tax, Odisha

Held

The Court held that the impugned order dated October 14, 2020, passed by the Additional Commissioner of Sales Tax, Odisha, Cuttack, was liable to be set aside on the short ground that it was passed without hearing the Petitioner. The Court reasoned that while Section 60(1) of the OVAT Act empowers the Commissioner to withhold a refund under certain circumstances, it does not grant unilateral authority to do so. Since withholding a refund is an adverse action against a dealer, it is imperative that the dealer is heard before such an order is passed. The Court found no provision within Section 60(1) that indicated the Commissioner could unilaterally pass such an order. The Court directed the Commissioner to issue a notice to the Petitioner, provide a hearing, and then pass a fresh order in accordance with Section 60(1) of the OVAT Act. Additionally, the Court directed the Joint Commissioner of Sales Tax (Appeal) to hear and dispose of the Petitioner's pending appeal against the original assessment order within three months.

Facts

The Petitioner, M/s A.K.Das Associates Ltd., challenged an order dated October 14, 2020, passed by the Additional Commissioner of Sales Tax, Odisha, Cuttack. This order withheld a refund of Rs. 25,21,860/- due to the Petitioner. The impugned order was passed without providing the Petitioner with an opportunity to be heard. The Department sought to justify this non-hearing by referencing Section 60(1) of the Odisha Value Added Tax (OVAT) Act. The Petitioner's appeal against the original assessment order was pending at the time the refund was withheld.

Key Issues

1. Whether the Additional Commissioner of Sales Tax, Odisha, Cuttack, could pass an order withholding refund under Section 60(1) of the OVAT Act without affording the Petitioner an opportunity of being heard? Petitioner's Argument: The Petitioner contended that the order withholding refund was passed without hearing them, which is a violation of natural justice. They argued that any order adversely affecting a dealer necessitates a prior hearing. Revenue's Argument: The Opposite Parties (Revenue) argued that Section 60(1) of the OVAT Act permitted the Commissioner to withhold refund if an appeal or other proceeding was pending and the Commissioner was of the opinion that granting the refund might adversely affect revenue and be irrecoverable. They relied on this provision to justify the non-hearing.