Sree Metaliks LTD. vs. Commnr. Of Commercial Taxes, CT And GST, Odisha

Facts

The Petitioner, M/s. Sree Metaliks Ltd., is before the High Court for the second time concerning an assessment order passed under the Odisha Value Added Tax Act, 2004 (OVAT Act) for the period April 1, 2013, to March 31, 2015. Previously, the Court directed the Petitioner to file an appeal before the Additional Commissioner of Sales Tax (Appeals) (ACST Appeals). The Petitioner filed the appeal on July 14, 2020, along with an application for waiver of pre-deposit under Section 77(4) of the OVAT Act. The ACST Appeals required a pre-deposit of Rs. 14,10,760, which is 10% of the tax demand. The Petitioner failed to make this deposit, leading to a show cause notice. The Petitioner contended that proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) were pending, with a moratorium in place, rendering the assessment order nonest. However, the ACST Appeals dismissed the appeal on July 19, 2021, for non-payment of the mandatory pre-deposit.

Held

The Court, considering the submission of the Petitioner's counsel, directed that the impugned order dated July 19, 2021, passed by the ACST (Appeals) would stand set aside, and the Petitioner's appeal would be revived, subject to the Petitioner depositing the sum of Rs. 14,10,760/- with the Department not later than September 10, 2021. The appeal is to be listed for directions on September 16, 2021, and the ACST (Appeals) is to hear the appeal on merits and pass a fresh order within four months thereafter. If the Petitioner succeeds in the appeal, the deposited sum is to be refunded with accrued interest. Until the appeal is disposed of, and subject to the Petitioner complying with the conditions, no coercive action will be taken against the Petitioner. Both parties are directed to cooperate with the ACST (Appeals) to ensure timely disposal. The Court did not decide the issue of the assessment order being nonest due to the IBC proceedings.

Key Issues

1. Whether the appeal before the ACST (Appeals) should be dismissed for failure to make the mandatory pre-deposit under Section 77(4) of the OVAT Act, read with Rule 87 of the OVAT Rules, despite the pendency of proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) and the contention that the assessment order was nonest. The Petitioner argued that the assessment order was nonest due to the moratorium issued under the IBC, and therefore, no pre-deposit should be required. The Petitioner's counsel later stated that the Petitioner would be prepared to make the pre-deposit of Rs. 14,10,760 within four weeks, without prejudice to its rights and contentions, and requested the appeal be revived. The Opposite Parties (Revenue/State) did not record any specific arguments in the judgment, but their action of issuing a show cause notice and the ACST Appeals' dismissal order indicate their stance on the mandatory nature of the pre-deposit.