1984 (4) TMI 254 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of raising the question of service of reassessment notices at a late stage.
2. Validity of service of reassessment notices on an employee who was not an agent.
3. Jurisdiction of the Sales Tax Officer to commence and complete reassessment proceedings.

Issue-Wise Detailed Analysis:

1. Validity of Raising the Question of Service of Reassessment Notices at a Late Stage:
The Tribunal allowed the dealer to raise the question of the validity of the service of reassessment notices during the rectification proceedings. The Tribunal justified this decision by noting that the facts were on record and not in dispute, and the question raised pertained to the jurisdiction of the Sales Tax Officer. The High Court agreed with the Tribunal, stating that since the issue was related to the jurisdictional authority of the Sales Tax Officer, it was appropriate for the Tribunal to permit the dealer to raise the question at a later stage.

2. Validity of Service of Reassessment Notices on an Employee Who Was Not an Agent:
The reassessment notices were served on Purshottam Darshi, an employee of the dealer, who was not an authorized agent as defined in Rule 2(i) of the Bombay Sales Tax (Procedure) Rules, 1954. The High Court emphasized that the service of a valid notice is the foundation of the jurisdiction of the Sales Tax Officer in making reassessment orders. It was noted that the notice must be served either on the dealer or on his agent as defined by the rules. Since Purshottam Darshi was not an authorized agent, the service of the notice was deemed invalid. The High Court referred to previous judgments, including S.K. Manekia v. Commissioner of Sales Tax and Commissioner of Income-tax, Bombay City-I v. Ramsukh Motilal, to support the conclusion that proper service of notice is a condition precedent for initiating reassessment proceedings.

3. Jurisdiction of the Sales Tax Officer to Commence and Complete Reassessment Proceedings:
The High Court held that the Sales Tax Officer did not have jurisdiction to initiate reassessment proceedings or pass reassessment orders due to the improper service of notices. The Court reiterated that the service of notice on a wrong person invalidates the notice and does not confer jurisdiction upon the reassessing authority. The Court cited several precedents, including Commissioner of Sales Tax v. Paramount Industrial Stores and the Supreme Court's decisions in Y. Narayana Chetty v. Income-tax Officer, Nellore, and Commissioner of Income-tax, Kerala v. Thayaballi Mulla Jeevaji Kapasi, to affirm that the service of notice is a condition precedent for reassessment proceedings. The High Court concluded that the reassessment proceedings were invalid due to the lack of jurisdiction stemming from improper service of notice.

Conclusion:
The High Court answered all three questions in favor of the assessee, holding that:
1. The Tribunal did not err in allowing the question of the validity of service of notices to be raised at a late stage.
2. The service of reassessment notices on Purshottam Darshi was invalid as he was not an authorized agent.
3. The reassessment proceedings were conducted without jurisdiction due to the improper service of notices.

There was no order as to costs.