1988 (2) TMI 459 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of assessments under section 7(3) of the U.P. Sales Tax Act.
2. Service of notice under section 21 of the U.P. Sales Tax Act.
3. Jurisdiction of the assessing authority to switch from section 21 to section 7(3).

Issue-wise Detailed Analysis:

1. Validity of Assessments under Section 7(3) of the U.P. Sales Tax Act:
The core issue was whether the assessments made under section 7(3) of the U.P. Sales Tax Act were valid, given that initial proceedings were taken under section 21. The assessee contended that once the notice under section 21 was issued, the assessing authority could not revert to section 7(3). The court examined the provisions of sections 7 and 21, noting that section 7(3) deals with cases where no return is filed or the return is incorrect or incomplete, allowing the assessing authority to determine the turnover to the best of his judgment after giving the dealer a reasonable opportunity to prove the correctness and completeness of any return submitted.

2. Service of Notice under Section 21 of the U.P. Sales Tax Act:
The court found that notices under section 21 were issued but not served on the assessee. The factual position, as stated by the Sales Tax Tribunal, was that the notices under section 21 were not served, leading to the initiation of proceedings under section 7(3). The court emphasized that for valid proceedings under section 21, the notice must be served on the dealer, and mere issuance of the notice is not sufficient. The court cited the Full Bench decision in Laxmi Narain Anand Prakash v. Commissioner of Sales Tax, which held that service of notice is a condition precedent for initiating proceedings under section 21.

3. Jurisdiction of the Assessing Authority to Switch from Section 21 to Section 7(3):
The court discussed the independent powers under sections 7(3) and 21, noting that the assessing authority could proceed under either section based on the circumstances. The court referred to the Full Bench decision in Commissioner, Sales Tax, U.P. v. Sugan Chand Shyam Lal, which allowed the assessing authority to choose between sections 7(3) and 21. The court distinguished the present case from Harinarain Chhotey Lal, where the assessment was made under section 21, and the option to switch to section 7(3) was not available due to the service of notice under section 21. In the present case, the absence of service of notice under section 21 allowed the assessing authority to proceed under section 7(3).

Conclusion:
The court concluded that the assessments under section 7(3) were valid as the notices under section 21 were not served on the assessee. The Sales Tax Officer was within his jurisdiction to proceed under section 7(3) due to the non-filing of returns by the assessee. The revisions were dismissed with costs, affirming the validity of the assessments under section 7(3).

Petitions dismissed.