Adhunik Metaliks LTD vs. State
Held
The Court held that the Assessing Officer (AO) failed to consider the Notification dated 1st March, 2002, issued by the Finance Department, Government of Odisha. This notification clarifies that for a coal-based sponge iron industry, coal is to be treated as a raw material directly incorporated into the finished product, sponge iron. Consequently, the Court set aside the impugned assessment order specifically on the issue of treating coal as a raw material. The matter was remanded to the AO for a fresh assessment. The AO is directed to reconsider this issue in light of the aforementioned notification and relevant case law. The Court also directed that the matter be placed before the AO on 1st December, 2021, for further directions.
Facts
The Petitioner, Adhunik Metaliks Ltd., challenged an assessment order dated 18th February, 2008, passed by the Assessing Officer (AO). A key issue before the AO was whether coal used in the manufacturing of sponge iron should be classified as a raw material. The AO rejected the Petitioner's contention and raised a demand. The Petitioner argued that a Notification dated 1st March, 2002, from the Finance Department, Government of Odisha, clearly stated that for coal-based sponge iron industries, coal is a raw material directly incorporated into the finished product, sponge iron. The High Court noted that this notification appeared to have been overlooked by the AO.
Key Issues
1. Whether coal used in the manufacturing of sponge iron should be treated as a raw material, as per the Finance Department Notification dated 1st March, 2002, of the Government of Odisha? Petitioner's Argument: The Petitioner contended that the aforesaid notification clarifies that for a coal-based sponge iron industry, coal is indeed a raw material which directly goes into the composition of the finished product, sponge iron. Revenue's Argument: The judgment does not record any specific argument from the State of Odisha (Opposite Party) on this issue. However, the AO's impugned order rejected the Petitioner's contention, implying the revenue's stance was against treating coal as a raw material in this context.
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Cause title — parties, addresses and appearances
ORDER 10.11.2021
1. One of the issues before the Assessing Officer (AO) in the impugned assessment order was whether coal which is used for manufacturing of sponge iron should be treated as a raw material? The AO in the impugned assessment order dated 18th February, 2008 rejected the contention of the Assessee that it should be treated as a raw material and proceeded to finalise the assessment raising demand accordingly.
Mr. Millan Kanoongo, learned Senior Advocate appearing for the Petitioner relies on the Notification dated 1st March, 2002 of the Finance Department, Government of Odisha which clarifies that for a coal based sponge iron industry, ‘coal’ is a raw material which directly goes into this compositi
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