1998 (3) TMI 645 - AT - VAT and Sales Tax

Summary

Issues:
1. Validity of the proceedings dated January 12, 1998 issued by the respondent.
2. Proper service of notice prior to assessment in accordance with rule 52 of the Tamil Nadu General Sales Tax Rules, 1959.

Analysis:

Issue 1: Validity of the proceedings dated January 12, 1998
The petitioner, engaged in the lottery business, contested the proceedings dated January 12, 1998, demanding payment of sales tax amounting to Rs. 5,03,238. The petitioner argued that the demand was unjust as no proper orders were passed, and no adequate notices were served. The petitioner contended that the demand lacked legality. The Tribunal reviewed the case and found that the assessment order of April 28, 1995, leading to the demand notice, was flawed. The Tribunal concluded that the order of assessment was in violation of natural justice principles and statutory rules. Consequently, the Tribunal quashed the order of assessment dated April 28, 1995, and directed the respondent to provide a fresh opportunity to the petitioner in compliance with the law. The Tribunal further ruled that the impugned demand notice dated January 12, 1998, should not be enforced until a new assessment order is issued.

Issue 2: Proper service of notice prior to assessment
The Tribunal examined whether the petitioner had been served with a notice before assessment as required by rule 52 of the Tamil Nadu General Sales Tax Rules, 1959. The Tribunal noted that the modes prescribed in the rule were not strictly adhered to. Even though the notice was sent by registered post, there was ambiguity regarding the acknowledgment card's return status. The Tribunal referenced a judgment by the Madras High Court, highlighting that service by affixture at business premises without issuing to the residential address was not valid. The Tribunal concluded that such irregularities constituted improper notice and violated rule 52. Consequently, the Tribunal set aside the order of assessment dated April 28, 1995, due to the infringement of natural justice principles and statutory rules related to notice service.

In conclusion, the Tribunal quashed the order of assessment, directed a fresh opportunity for the petitioner, suspended the enforcement of the demand notice, and instructed the respondent to issue a pre-revision notice to the petitioner's counsel for proper representation.