M/S.Sri Jagannath Alloys PVT.LTD. vs. Sales Tax Officer,Rourkela 1

Facts

The Petitioner, M/s. Sri Jagannath Alloys Pvt. Ltd., challenged an assessment order dated 06.10.2016 passed under Section 10 of the Entry Tax Act, 1999, for the tax periods from 01.04.2009 to 31.03.2012. This order raised a demand of Rs. 5,24,409/-, comprising Rs. 1,74,803/- as tax and Rs. 3,49,606/- as penalty. The Petitioner contended that the penalty should not have been imposed due to a refund of tax under the Odisha Value Added Tax (OVAT) Act, 2004. The Opposite Party, Sales Tax Officer, Rourkela, submitted that the refund order under the OVAT Act, 2004, for the period 2009-10 to 2011-12, was issued on 29.12.2016, after the assessment order. The Deputy Commissioner of Sales Tax adjusted the demand of Rs. 5,24,409/- from the sanctioned refund of Rs. 72,45,332/-, thereby recovering the entire demand.

Held

The Court held that the writ petition had become infructuous. The reasoning was based on the submission by the Revenue that the entire demand raised under the Entry Tax Act, 1999, amounting to Rs. 5,24,409/-, had been recovered by adjustment against the refund sanctioned under the Odisha Value Added Tax Act, 2004. The refund order was issued after the assessment order, and the adjustment effectively settled the entire demand. Since the demand was fully recovered, there was nothing left for adjudication in the writ petition. The Court did not explicitly decide on the validity of the penalty itself, but rather on the procedural outcome of the recovery. The operative direction was to dispose of the writ petition as infructuous.

Key Issues

1. Whether the penalty imposed under Section 10 of the Entry Tax Act, 1999, is invalid when a refund of tax was available under the Odisha Value Added Tax Act, 2004? Petitioner's contention: The Petitioner argued that the penalty should not have been imposed because there was a refund of tax under the OVAT Act, 2004, implying that the tax liability was already settled or offset by the refund. Revenue's contention: The Revenue contended that the assessment order under the Entry Tax Act, 1999, was dated 06.10.2016, while the refund order under the OVAT Act, 2004, was dated 29.12.2016. The Revenue further submitted that the demand raised in the assessment order was fully recovered by adjusting it against the refund sanctioned under the OVAT Act, 2004. The Revenue also argued that the Petitioner did not dispute the tax liability itself in the writ petition, and therefore, there was no infirmity in recovering the demand by adjustment.