1991 (4) TMI 355 - SC - VAT and Sales Tax

Whether the Tribunal was correct in law in holding that the notice under section 15 of the Bombay Sales Tax Act, 1953, served on Mr. N.A. Merchant, an employee of the concern was a valid service in law? Whether on a true and correct interpretation of section 15 of the Bombay Sales Tax Act, 1953, the Tribunal was correct in law in holding that the assessment proceedings were valid in law, though the notice under the said section 15 was served on Mr. Merchant, an employee of the concern, and not on the dealer? Held that - Appeal dismissed. The 1953 Act has been repealed by the Bombay Sales Tax Act, 1959. Section 35 of the 1959 Act provides for reassessment and giving an opportunity to the dealer. The provisions of section 35 are structurally different from the provisions of section 15(1) of the 1953 Act. Under the 1959 Act what is required is that the dealer must be afforded a reasonable opportunity of being heard and there is no requirement of service of notice as contemplated under the 1953 Act and the rules framed thereunder. The question of law raised in these appeals is, therefore, sterile and cannot arise under the 1959 Act. Indeed, it has no general importance and become academic. We, therefore, express no opinion on the question of law raised in these cases

Summary

Issues:
Validity of notice served for reassessment of escaped turnover on a partnership firm. Interpretation of section 15 of the Bombay Sales Tax Act, 1953, regarding service of notice on the dealer or agent. Relevance of rules 2(1) and 47 of the Bombay Sales Tax (Procedure) Rules, 1954 in determining the validity of the notice served.

Analysis:
The judgment in question revolves around the validity of the notice served for reassessment of escaped turnover on a partnership firm. The notice was not served directly on the dealer, a partnership firm in each case, but on an employee of the firm. The main contention was whether the service of notice on an employee was valid under section 15 of the Bombay Sales Tax Act, 1953. The Tribunal referred relevant questions to the Bombay High Court, focusing on the validity of the notice served on the employee and the interpretation of the law regarding the service of notice on the dealer or agent as required by the Act and rules.

The High Court held that the notice served on the employee was not valid as he was not proven to be an agent as defined under the relevant rules. The court emphasized that service of notice on the dealer or agent is a condition precedent for the authority to acquire jurisdiction for reassessment. Incorrect service of notice would invalidate the proceedings, rendering them jurisdictionally deficient. The court's interpretation highlighted the importance of adhering to the statutory requirements for initiating reassessment proceedings.

The judgment delves into the procedural aspects by referencing the relevant provisions of the Bombay Sales Tax Act, 1953, and the associated rules. Rule 47 of the Bombay Sales Tax (Procedure) Rules, 1954, outlines the methods of serving notices, emphasizing delivery to the addressee or their agent as a valid mode of service. The definition of an "agent" under the rules is crucial in determining the validity of service on behalf of the dealer or person concerned.

Furthermore, the judgment clarifies that the 1953 Act has been repealed by the Bombay Sales Tax Act, 1959, which structurally differs from the previous provisions regarding reassessment and notice requirements. Under the 1959 Act, the focus is on affording the dealer a reasonable opportunity to be heard, without the specific requirement of service of notice as mandated under the earlier Act and rules. This distinction renders the legal question raised in the appeals irrelevant under the 1959 Act, making it academic and of no general importance. Consequently, the Supreme Court dismissed the appeals without costs, avoiding a determination on the legal question raised under the repealed Act.

In conclusion, the judgment underscores the significance of adhering to statutory procedures for serving notices in reassessment proceedings, emphasizing the necessity of proper service on the dealer or authorized agent to confer jurisdiction on the authority. The decision provides clarity on the legal requirements for initiating reassessment under the repealed Act while highlighting the procedural nuances under the subsequent legislation.