1994 (8) TMI 276 - HC - VAT and Sales Tax

Summary

Issues:
- Transfer of case from one district to another without notice to the assessee
- Compliance with principles of natural justice before transferring a case
- Validity of transfer under Rule 81 of U.P. Sales Tax Rules
- Constitutionality of Rule 81 under Article 14 of the Constitution of India

Transfer of case without notice:
The petitioner sought a writ to restrain the Sales Tax Officer from proceeding with the assessment for the year 1984-85 without giving any notice. The Court deliberated on whether the Sales Tax Commissioner could transfer a case without providing notice to the assessee. Reference was made to a similar provision in the Indian Income-tax Act, emphasizing the importance of following the principles of natural justice. The Court highlighted the need for the assessee to be given a reasonable opportunity to represent their views before any transfer order is made.

Compliance with principles of natural justice:
Citing the case of C.B. Gautam v. Union of India, the Court emphasized the significance of providing a reasonable opportunity to be heard before making orders that could have adverse consequences for the parties involved. Despite the tight time-frame for making such orders, the Court stressed that parties should be given a chance to present their case. The Court underscored the importance of affording the assessee an opportunity to show cause against any transfer, especially when it could impact their rights.

Validity of transfer under Rule 81:
Rule 81 of the U.P. Sales Tax Rules empowers the Commissioner to transfer cases from one district to another. However, the Court held that such transfers must be done after giving notice to the assessee. Without affording the assessee an opportunity to show cause, the rule would be deemed arbitrary and discriminatory, violating Article 14 of the Constitution of India. The Court concluded that the transfer in this case was invalid due to the lack of notice to the assessee.

Constitutionality of Rule 81 under Article 14:
The Court opined that Rule 81, which allows for the transfer of cases without providing an opportunity for the assessee to show cause, would be unconstitutional under Article 14. Upholding the importance of procedural fairness and non-discrimination, the Court held that the rule must be interpreted in a manner that ensures the assessee's right to be heard before any transfer is effected. The Court emphasized the need for procedural safeguards to prevent arbitrary actions that could adversely affect the parties involved.

In conclusion, the Court allowed the writ petition, quashing the transfer order passed by the Commissioner. However, it permitted the Commissioner to transfer the case to another district within his range after giving notice to the assessee and affording them a reasonable opportunity to show cause. The Court highlighted the importance of disposing of such petitions promptly to avoid prolonged suspension of assessment proceedings.