1971 (2) TMI 78 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of assessment based on seized documents.
2. Service of pre-assessment notice.
3. Jurisdiction of High Court under Article 226.

Analysis:
1. The petitioner appointed a manager for his hotel business and submitted a return for the assessment year 1965-66. The Commercial Tax Department conducted an inspection, seized account books, and proposed an assessment based on sales entered in a pocket-book discovered during the raid. The petitioner challenged this assessment, claiming it was arbitrary and without his explanation. The petitioner filed an appeal under the Madras General Sales Tax Act, questioning the legality of the order. The High Court noted that the petitioner's appeal to the appellate authority negated relief under Article 226 of the Constitution. However, considering the circumstances, the court directed the appellate authority to allow the petitioner to contest the service of the pre-assessment notice, which the petitioner claimed was not served on him effectively. The court instructed the department to produce the process-server for cross-examination to determine the validity of the service. The appellate authority was directed to proceed with the appeal based on the outcome of this examination.

2. The department contended that the pre-assessment notice was served on a person named K.S. Murthy on 24th September 1966, and as no objections were filed, the assessment was completed on 30th September 1966. The petitioner argued that the notice was not served on him and sought an opportunity to disprove the service. The court directed the Appellate Assistant Commissioner to allow the petitioner to establish the lack of service of the notice and to conduct a thorough examination, including cross-examining the process-server. The court emphasized that justice required the petitioner to have an effective opportunity to challenge the service of the notice.

3. The High Court acknowledged that the petitioner's appeal to the appellate authority was already pending, which typically precludes relief under Article 226. However, due to the specific circumstances of the case regarding the disputed service of the pre-assessment notice, the court provided directions to the appellate authority to address this issue. The court highlighted the importance of ensuring that the petitioner had a fair opportunity to contest the legality of the assessment process. Ultimately, the High Court dismissed the writ petition but instructed the appellate authority to proceed with the appeal in light of the directions provided regarding the service of the notice.

This judgment underscores the significance of procedural fairness in tax assessments and the courts' role in ensuring that individuals have a genuine opportunity to challenge administrative decisions.