1980 (1) TMI 174 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of service of notice u/s 21 of the U.P. Sales Tax Act.
2. Jurisdiction of the Sales Tax Officer to finalize proceedings u/s 21 without proper notice.
3. Applicability of the principle of estoppel in taxation proceedings.

Summary:

1. Validity of Service of Notice u/s 21:
The core issue was whether the service of notice u/s 21 of the U.P. Sales Tax Act on a stranger could be deemed valid. The court emphasized that notice u/s 21 is jurisdictional and a condition precedent. The power to make an inquiry arises only after the service of notice. If the statutory condition is not complied with, the jurisdiction to make an inquiry is non-existent. The court referred to several precedents, including *Commissioner of Sales Tax v. Haji Allah* and *Sikri Brothers and Co. v. Commissioner of Sales Tax*, which held that there is no waiver or estoppel of notice u/s 21.

2. Jurisdiction of the Sales Tax Officer:
The court examined the scope of section 21, highlighting that the words "after issuing notice to the dealer" are significant. It was established that service of notice is a condition precedent for the assumption of jurisdiction. The court cited *Commissioner of Sales Tax, U.P. v. Sewa Singh Mangal Singh* and *Sri Krishna Chandra v. State of Uttar Pradesh*, which held that no assessment or reassessment could be made unless a valid notice u/s 21 is issued and served upon the assessee within the prescribed time. The court concluded that mere knowledge of the proceedings cannot substitute for valid service of notice.

3. Applicability of the Principle of Estoppel:
The court addressed whether the participation of an assessee in proceedings could cure the invalidity of notice and confer jurisdiction on the assessing authority. It was firmly established that jurisdiction cannot be conferred by consent, acquiescence, or waiver. The court cited *Ledgard v. Bull* and *Mahabir Singh v. Narain Tewari*, which held that estoppel cannot confer jurisdiction where it does not exist. The court also referred to *Commissioner of Income-tax v. Thayaballi Mulla Jeevaji* and *Commissioner of Sales Tax v. Ram Chand*, which reiterated that service of notice is a condition precedent to the exercise of jurisdiction and cannot be waived by participation.

Conclusion:
The court held that the notice u/s 21 having been improperly served, the initiation of proceedings was without jurisdiction and could not be validated by the participation of the assessee. The revision was allowed, and the assessee was entitled to costs assessed at Rs. 300. The fee of the standing counsel was fixed at Rs. 300. The principle enunciated in *Kalpanath Singh v. Commissioner of Sales Tax* was not considered good law.

Petition allowed.