1964 (8) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the assessment order passed by the Assistant Sales Tax Officer.
2. Proper service of notice and compliance with procedural requirements under the U.P. Sales Tax Act.
3. Authority of the Sales Tax Officer to add names to the assessment order without proper notice.

Analysis:
The judgment pertains to a writ petition under Article 226 of the Constitution seeking a writ of prohibition against the Assistant Sales Tax Officer (S.T.O.) to prevent the recovery of tax for the year 1958-59 based on an assessment order. The petitioner, engaged in the manufacture and sale of hand-made biris, appointed selling agents, including Messrs Ghanshiam & Co. in Aligarh. The S.T.O. acknowledged that Ghanshiam & Co. was a branch of the petitioner's firm and had ceased to exist after 1959. Despite this knowledge, the S.T.O. issued notices and made assessments on Ghanshiam & Co., which was defunct, without proper adherence to procedural requirements. The S.T.O. failed to serve notices correctly and added names to the assessment order without proper authority, leading to a flawed assessment process.

The S.T.O. issued multiple notices through affixation to a defunct business, contrary to the provisions of rule 77 of the Sales Tax Rules, which required service by registered post before resorting to affixation. The assessment order was made ex parte on Ghanshiam & Co., Aligarh, without following due process. The S.T.O. irregularly added names to the assessment order, which was deemed unauthorized and against the principles of natural justice. The judgment emphasized that before holding a person liable for tax, proper notice and opportunity for hearing must be provided, and tax can only be levied in accordance with the law. The S.T.O.'s actions were criticized for disregarding legal provisions and conducting assessments in a manner that lacked authority and adherence to procedural requirements.

In conclusion, the assessment order and notice of demand, where names were added without proper authority, were deemed unlawful and were quashed by issuing a writ of certiorari. The Sales Tax Officer was restrained from further proceedings based on the flawed assessment order. The judgment highlighted the importance of following procedural rules, providing proper notice, and upholding principles of natural justice in tax assessments to ensure legality and fairness in the process.