JUDGMENT :

Biswajit Mohanty, J.

The petitioner, who happens to be a Private Limited Company, has filed the present writ application praying for quashing of notice dated 17.5.2012 issued by opposite party no.3 under Annexure-7 initiating the reassessment proceeding for the period 1.4.2008 to 31.3.2011 under Section-43 of the Orissa Value Added Tax Act, 2004, for short “OVAT Act” and consequent reassessment order dated 26.11.2012 under Annexure-11 passed for the above noted period imposing tax to the tune of Rs.132,37,45,137/- and penalty to the tune of Rs.264,74,90,274/- as well as consequential Demand Notice dated 26.11.2012.

2. The case of the petitioner is that initially the Mining Lease Deed dated 14.8.2001 for operation of Thakurani Block-B, Iron Ore Mines comprising M.L. area over 947.046 hectares was executed in favour of Sunder Lal Sarda and Mohan Lal Sarda. Initially, the mining activities were undertaken by the lessee and the “Run of Mines” for short, “ROM”, which is otherwise called as mother earth of Iron Ore consisting of raw unprocessed ores in its natural state obtained after blasting or digging was excavated and handed over to M/s. Jindal Steel & Power Limited, for short, “JSPL”. Thereafter, “JSPL”, which has installed crusher plant inside the leasehold area used to crush and downsize the excavated ores/ROM consisting of large boulders, fragments and fines along with other contaminants/impurities. According to Mr. Gopal Jain, learned Senior Advocate for the petitioner after crushing of ROM in the crusher and sizing in the screen, Calibrated Lump Ore (CLO) is obtained. Size of CLO varies from 5 mm to 18 mm or 10 mm to 40 mm containing higher grade of iron. Another by-product of such crushing and screening is known as Fines containing granule materials like alumina, silica, dusts, spoils and other impurities. According to Mr. Jain, learned Senior Advocate, these Fines require further processing by way of washing and beneficiation so as to produce usable Fines and slime material. Earlier, excavated ores/ROM were crushed, sized and screened by “JSPL” and were given back to the lessee – Sunder Lal Sarda and Mohan Lal Sarda for sale to prospective buyers and “JSPL” was paid for job work charges for undertaking crushing, sizing and screening of ROM. While undertaking crushing, sizing, screening of the excavated ROM, huge quantity of residuary mixed with low grade Fines is generated, which are more than the quantity of CLO. It is the case of the petitioner that out of the excavated ore, after crushing and sizing on an average 25% to 30% CLO was produced and the rest 70% to 75% represented low grade fines. For such low grade fines, there was no market at all. This resulted in piling of huge stock of residuary mixed with low grade Fines covering the mining lease area. Since such business module described above was not viable/workable and not cost effective, as a prudent business decision, in the year 2004, the then the lessee decided to sell ROM on as is where is basis. “JSPL” which had installed the crusher unit inside the leasehold area of the lessee, agreed for lifting of entire excavated ROM on payment basis. In such background, the lessee vide letter dated 25.2.2004, requested the Deputy Director of Mines, Joda, Keonjhar to allow it to sell ROM from their Thakurani Iron Ore Mines to “JSPL” on ex-mines basis. On 4.3.2004, the Deputy Director of Mines, Joda vide letter No.11479 (Annexure-1/Annexure-A) wrote to the Director of Mines, Orissa inviting his attention to letter dated 25.2.2004 of the lessee for according approval for sale of ROM from their Thakurani Iron Mines. Pursuant to this, vide Letter No.MV(a)-39/2002 2853/DM. dated 27.3.2004, the Director of Mines, Orissa wrote back to the Deputy Director of Mines, Joda, Keonjhar intimating that Sunder Lal Sarda and Mohan Lal Sarda be allowed to supply ROM on ex-mines basis within leasehold area to “JSPL” in accordance with the provision of T.P. Regulations & O.M. (PTS &