Shalimar Chemical Works (P) LTD. vs. State Of Odisha

Facts

The petitioner, Salimar Chemical Works (P) Ltd., assailed a notice dated 09.02.2022 for recovery of arrear demand of Rs.42,34,209/- issued by the Joint Commissioner of CT and GST, CT & GST Circle, Cuttack-I Central, Cuttack. This demand pertained to tax periods from 01.04.2013 to 30.09.2015 and was based on an assessment order dated 14.07.2017 passed under Section 42 of the Odisha Value Added Tax Act, 2004 (OVAT Act). The petitioner argued that the recovery notice was premature as the issue of whether Jasmine Coconut Oil is Ayurvedic hair oil was pending before the High Court in STREV No. 49/2015 for earlier tax periods. The petitioner had also filed a revision petition under Section 79(2) of the OVAT Act challenging the assessment order.

Held

The Court held that the writ petition was not maintainable against the recovery notice. It reasoned that Section 77(1) of the OVAT Act provides for an appeal against an assessment order passed under Section 42, while Section 79(2) allows for revision by the Commissioner of orders other than those of the Tribunal. The Court emphasized that where a statute provides a specific remedy, it must be followed. The petitioner had filed a revision under Section 79(2) which was not the prescribed remedy for challenging an assessment order under Section 42. Furthermore, the Court noted that the recovery notice was essentially a show cause notice, and writ petitions are generally not entertained against such notices unless issued without authority of law. The petitioner had not demonstrated any such lack of authority. The Court also observed that no stay order was in operation against the demand, and the petitioner had not sought a stay from the appellate authority. Therefore, the Joint Commissioner was not constrained from proceeding with recovery. The Court concluded that the writ petition was premature as the petitioner could still respond to the recovery notice and participate in the proceedings.

Key Issues

1. Whether the recovery notice dated 09.02.2022 for arrear demand under the OVAT Act should be quashed, considering the pendency of a related sales tax revision (STREV No. 49/2015) before the High Court and a revision petition filed by the petitioner under Section 79(2) of the OVAT Act challenging the assessment order dated 14.07.2017. Petitioner's arguments: The recovery notice should not have been issued as the core issue of classification of Jasmine Coconut Oil as Ayurvedic hair oil is sub judice before the High Court. The Joint Commissioner should have awaited the outcome of the pending sales tax revision and the revision filed by the petitioner. The recovery notice was an illegality. Revenue's arguments: The interim order in STREV No. 49/2015 did not grant a stay of the Tribunal's order, making its findings binding. The petitioner's remedy against the assessment order under Section 42 was an appeal under Section 77(1) of the OVAT Act, not a revision under Section 79(2), rendering the revision petition not maintainable. The recovery notice was therefore valid as there was no stay order in favour of the petitioner.