Facts of the Case

M/s Siemens Ltd. was assessed by the Assessing Authority-cum-Joint Commissioner of Sales Tax, Sundargarh Range, Rourkela, by order dated 20.02.2015, to pay ₹180,71,64,744 with interest and penalty at 2% per month, for the assessment period 2011-2013, in respect of a composite works contract (engineering, design, supply, manufacture, erection, installation, testing and commissioning of electrical equipment, substations, HT packages, and a captive power plant). The company had claimed exemption on inter-state supplies under Section 6(2) of the Central Sales Tax Act, 1956, but the Assessing Authority treated the transactions as intra-state sales under the Odisha VAT Act, relying on a since-overruled Kerala High Court ruling (M/s Cinzac Technical Service v. State of Kerala). No show-cause notice was issued before the assessment. Siemens challenged the order directly before the Orissa High Court under Article 226, bypassing the statutory appeal, given the size of the demand.

Issues Involved

  1. Whether the writ petition was maintainable despite an alternative statutory appellate remedy.
  2. Whether the assessment order, passed without a show-cause notice, violated principles of natural justice.
  3. Whether the transactions were correctly characterised as an indivisible works contract for OVAT purposes.

Petitioner's Arguments

  • No opportunity of hearing was given before the assessment.
  • The precedent relied upon by the Assessing Authority (Cinzac Technical Service) had already been set aside by the Supreme Court.
  • Approaching the appellate forum would serve no useful purpose given the amount involved.

Respondent's Arguments

  • The order was appealable, and the petitioner ought to have pursued the statutory remedy rather than invoking writ jurisdiction.
  • On merits, the petitioner was liable to pay the demand raised.

Court Order / Findings

  • The Court held that although an alternative remedy existed, the complete absence of a show-cause notice before assessment justified invoking Article 226.
  • On the facts recorded by the Assessing Authority itself, the contract was found to be a composite/indivisible works contract, and the assessment treating it otherwise, without notice or hearing, could not be sustained.
  • The assessment order dated 20.02.2015 was quashed and the matter remitted for fresh consideration after issuing a show-cause notice and affording a hearing, with the petitioner undertaking not to seek adjournments given the age of the matter.

Important Clarification

This is a pre-GST sales tax/VAT ruling on the Central Sales Tax Act and Odisha VAT Act — it has no bearing on GST law, though it illustrates a principle equally relevant today: an assessment made without a preceding show-cause notice, in denial of natural justice, is liable to be quashed regardless of the tax regime.

Sections Involved

  • Central Sales Tax Act, 1956 — Section 6(2)
  • Odisha Value Added Tax Act, 2004 — Section 34 and Section 50(5)

Decision – In Favour of

Petitioner (M/s Siemens Ltd.) — assessment order quashed and remanded for fresh consideration.

Case Details

  • Court: High Court of Orissa at Cuttack
  • Case: W.P.(C) No.5510 of 2015
  • Coram: Dr. Justice B.R. Sarangi and Mr. Justice M.S. Raman
  • Date: 24.04.2023

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.