JUDGMENT

B. N. MAHAPATRA J. - The petitioner, in this writ petition calls in question, the legality of the order dated June 28, 2006 passed by the Assistant Commissioner, Sales Tax, (LTU) Cuttack - II Range, Cuttack (hereinafter called the "the ACST") under section 30 of the Orissa Value Added Tax Act, 2004 (hereinafter called "the OVAT Act") whereby claim of the petitioner that furnace oil qualifies to be an "input" for the purpose of availing input tax credit was rejected. Consequently, a tax demand to the tune of Rs. 32,26,909 was raised by that order.

The facts which give rise to the present writ petition are set out below.

The petitioner in the present case is a company incorporated under the Companies Act, 1956 having its registered office at 3rd Floor, Maker Chambers - IV, 222, Nariman point, Mumbai - 400 021 and factory at Laxminagar, Baulpur, Dhenkanal. It is a dealer registered under the OVAT Act. It manufactures polyester staple fibres (hereinafter referred to as, "the PSF") through Orissa Poly-fibres Limited on job-work basis, out of mono ethylene glycol (hereinafter referred to as "the MEG") and pure teraphthallic acid (hereinafter referred to as "the PTA") and polymer chips at Dhenkanal. The said materials are brought from outside the State of Orissa either by way of stock transfer or by way of inter - State trade or commerce. It has filed its return regularly under the OVAT Act for the financial year 2005-06. The petitioner claimed input tax credit to the tune of Rs. 83,81,744 for the financial year 2005-06 out of which the petitioner availed input tax credit to the tune of Rs. 69,36,982 against the output tax under the OVAT Act. On January 9, 2006, the Sales Tax Officer, Angul, issued a letter to the petitioner directing it to pay Rs. 47,26,908 on the ground that the claim made by the petitioner for input tax credit on furnace oil was not admissible. Subsequent thereto by an order dated February 6, 2006, the ACST issued an order of suspension of registration certificate to the petitioner under the OVAT Act on the ground that the petitioner had knowingly furnished incorrect particulars claiming input tax credit on furnace oil which was allegedly not a consumable directly used in manufacturing process, but was used as a fuel for burning. Simultaneously, a notice in form VAT-110 was issued to the petitioner to produce papers, documents and evidences to rebut the charges made in the suspension order.

Being aggrieved by both the notices dated January 9, 2006 and February 6, 2006, the petitioner instituted a writ petition being W.P. (C) No. 2359 of 2006 under article 226 of the Constitution of India together with an application for interim order being Misc. Case No. 1935 of 2006. In the said application, the petitioner challenged the constitutional validity of section 30 of the OVAT Act. Vide order dated February 21, 2006 this court directed the petitioner to deposit Rs. 15 lakhs and simultaneously directed the opposite parties to revive the registration certificate upon receipt of such amount. It was further ordered that the parties would appear before the ACST on March 6, 2006 on which date the ACST shall fix a date for hearing and proceed with the same. Notice was also issued upon opposite parties on the constitutional validity of section 30 of the OVAT Act. Pursuant to the said order dated February 21, 2006 the petitioner deposited Rs. 15 lakhs with the ACST and the latter withdrew the order of suspension on February 24, 2006. As per the direction of this court, the petitioner appeared on March 6, 2006 and the case was adjourned to March 28, 2006 for hearing. Subsequently, the case was adjourned to April 7, 2006 and again to May 26, 2006 and June 17, 2006 and finally to June 28, 2006, on which date the advocate for the petitioner filed written note of submission. On June 28, 2006, the ACST passed the impugned order under section 30 of the OVAT Act, inter alia, holding that the furnace oil was not a consumable and