1956 (1) TMI 18 - HC - VAT and Sales Tax

Summary

Issues:
1. Proper service of notice to the applicants for sales tax assessment for three different periods.
2. Effectiveness of the reminder notice sent to the applicants.
3. Whether the absence of proper notice and opportunity to be heard vitiated the assessment proceedings.

Analysis:

Issue 1: Proper service of notice to the applicants for sales tax assessment
The revision applications dealt with three assessment periods. The first period involved transactions conducted by Gulbai, who transferred the firm to Ratanshi Sojpal during the second period. The business was later transferred to the present partners. The Sales Tax Officer issued notices in December 1949, but the applicants claimed non-receipt. The applicants obtained a registration certificate before the notices were sent. The Sales Tax Officer issued a reminder in January 1950, which was received by one of the present partners. However, the notice was withdrawn after a partner appeared before the Sales Tax Officer. The assessment order was made in September 1950 and served on the firm. The applicants later claimed that the prior owners were liable for sales tax.

Issue 2: Effectiveness of the reminder notice
The applicants argued that they did not receive the notice dated December 2, 1949, and contended that the reminder notice was ineffective as it was withdrawn by the Sales Tax Officer. The Bombay Sales Tax Rules prescribed methods for serving notices, including delivery by hand or by post. As the notice was sent by ordinary post and not registered post, the presumption of proper service did not apply. The withdrawal of the reminder notice indicated that the original notice was ineffective, depriving the applicants of an opportunity to represent their case.

Issue 3: Vitiating the assessment proceedings
The applicants contended that the absence of proper notice and opportunity to be heard by the Sales Tax Officer invalidated the assessment proceedings. Referring to a previous decision, the court held that the lack of notice and opportunity to be heard affected the proceedings. As a result, the court allowed the application, setting aside the orders of the Sales Tax Officer, Assistant Collector of Sales Tax, and Additional Collector of Sales Tax.

In conclusion, the High Court of Bombay held that the failure to provide proper notice and an opportunity to be heard to the applicants invalidated the assessment proceedings, leading to the setting aside of the orders issued by the tax authorities.