1983 (1) TMI 231 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of proceedings for escaped assessment under section 21 of the U.P. Sales Tax Act for 1971-72.
2. Lack of proper service of notice under section 21.
3. Interpretation of Rule 77 regarding service of notice.
4. Justification of simultaneous service by affixation and registered post.
5. Validity of joint notice under clauses (a) and (d) of Rule 77.

Detailed Analysis:
1. The petitioner sought the quashing of proceedings for escaped assessment initiated under section 21 of the U.P. Sales Tax Act for 1971-72, citing absence of material for opinion formation and failure to serve notice in accordance with rule 77. The proceedings were reopened based on information received regarding an import license held by the petitioner, leading to a dispute over the sufficiency of grounds for the assessment. The Court refrained from delving into the assessment controversy but found merit in the argument that the notice under section 21 was not properly served, which was crucial for jurisdiction.

2. The Court analyzed the service of notice under Rule 77, emphasizing that service by affixation should only be used if other modes are impracticable. It was noted that the Sales Tax Officer directed service by affixation despite sending a registered notice simultaneously, without proper justification for the necessity of the registered post. The Court highlighted that the application of mind regarding the impracticability of registered post should have been recorded in the order sheet, not in a counter-affidavit. The failure to exhaust other modes of service before resorting to affixation rendered the notice invalid.

3. Regarding the interpretation of Rule 77, the Court referenced previous judgments emphasizing that service by affixation is a last resort and should not be combined with other modes without proper consideration. The objective determination of the impracticability of other modes before resorting to affixation was deemed essential. A Division Bench decision was cited to support the requirement of a separate application of mind for each mode of service, particularly emphasizing the exceptional nature of service by affixation.

4. The Court dismissed the Sales Tax Officer's explanation for the rushed service due to time constraints, highlighting that the validity of service was crucial for jurisdiction under section 21. The lack of proper service rendered the proceedings without jurisdiction, leading to the quashing of the notice initiating the assessment proceedings and the subsequent assessment order. The petitioner was granted costs in the successful petition.