Facts of the Case

This case concerns old Odisha VAT and Central Sales Tax arrears from the pre-GST period, not GST itself. M/s Rashi Steels, Sundargarh, challenged a demand notice dated 7th December 2022 issued by the Sales Tax Officer, Rourkela-II Circle, intimating it to pay outstanding arrears. Of the total demand, Rs. 72,23,462/- related to tax periods from 1.4.2013 to 31.3.2015, against which the petitioner had already filed a second appeal (SA No. 29(V) of 2022) before the Odisha Sales Tax Tribunal, which was pending. The remaining arrears related to OVAT for 2007-2012 and 2013-2014, and CST for 2016-2017 and 2002-2003.

Issues Involved

  1. Whether the demand of Rs. 72,23,462/-, being sub judice before the Tribunal, could be recovered notwithstanding the pending second appeal.
  2. Whether the remaining arrears not shown to be under any pending challenge could be recovered as demanded.

Petitioner's Arguments

  • The demand of Rs. 72,23,462/- for the periods 2013-2015 was sub judice before the Odisha Sales Tax Tribunal in SA No. 29(V) of 2022, and hence could not be simultaneously recovered through the impugned notice.

Respondent's Arguments

  • The Standing Counsel for the Sales Tax Department confirmed, based on a letter dated 21.09.2023, that the debarring provisions of the OVAT Act meant the amount for 2013-2015 could not presently be recovered given the pending Tribunal appeal.
  • As for the remaining arrears, the Department maintained that they were liable to be recovered and the assessee should clear the dues, since no material was shown that this portion was under challenge.

Court Order / Findings

  • The Court held that the Rs. 72,23,462/- demand, being sub judice before the Tribunal, could not be adjudicated in the writ petition and would abide by Section 78(6) of the OVAT Act (which stays recovery of the balance amount once 20% of the disputed tax/interest is deposited).
  • For the remaining arrears (OVAT 2007-2012, 2013-2014, and CST for 2016-2017 and 2002-03), the Court found the petitioner had not placed any material showing these amounts were sub judice or varied by any court, and therefore the petitioner remained liable to clear them.
  • The writ petition was accordingly partly allowed, with no order as to costs.

Important Clarification

This is a pre-GST tax recovery matter under the Odisha VAT Act and Central Sales Tax Act. It has no application to GST assessments; the only relevance to a GST reader is procedural — it illustrates how courts split relief where part of a demand is genuinely under appeal and part is not, rather than blanket-staying an entire arrear notice.

Sections Involved

  • Odisha Value Added Tax Act, 2004 — Section 78(6) (pre-deposit and stay of balance recovery pending Tribunal appeal), as amended by the OVAT (Amendment) Act, 2017.
  • Central Sales Tax Act, 1956 — governing the CST arrears for the relevant periods.

Decision – In Favour of

Partly allowed — in the petitioner's favour to the extent the sub judice portion of the demand was protected under Section 78(6) OVAT; in the Department's favour for the balance arrears, which remained recoverable.

Case Details

Court: High Court of Orissa at Cuttack
Case No.: W.P.(C) No. 3679 of 2023
Coram: Acting Chief Justice Dr B.R. Sarangi and Mr Justice Murahari Sri Raman
Date of Order: 12.10.2023

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