1996 (7) TMI 540 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order of the Sales Tax Appellate Tribunal challenged as illegal and arbitrary.
2. Whether an auditor is considered an agent under rule 58 of the Andhra Pradesh General Sales Tax Rules, 1957.
3. Proper service of notice on the dealer for assessment purposes.

Analysis:
The petitioner, a registered dealer under the Andhra Pradesh General Sales Tax Act, challenged the Sales Tax Appellate Tribunal's order as illegal and arbitrary, specifically focusing on the issue of whether an auditor qualifies as an agent under rule 58 of the Andhra Pradesh General Sales Tax Rules, 1957. The assessment for the year 1981-82 involved the purchase of 739 bags of groundnut seeds, disputed by the petitioner. The dispute arose regarding the service of notice on the auditor, which the petitioner argued did not constitute proper service to the dealer. The Tribunal remanded the matter to the assessing authority for penalty considerations, based on the notice served on the auditor.

The crux of the matter revolved around the interpretation of rule 58, which outlines the methods of serving notices, summons, or orders to dealers. The rule allows for service on the dealer, manager, or agent, with contention arising over whether an auditor falls within the definition of an agent. The government pleader argued that service on the auditor should be deemed proper, citing section 35(a) of the Act, which mentions representation by a chartered accountant in proceedings. However, the Court differentiated between service of notice and appearance in proceedings, emphasizing that mere appearance by an auditor does not equate to receiving pre-assessment notice on behalf of the dealer.

Ultimately, the Court held that service of notice on the auditor, without evidence of the auditor's involvement in the assessment proceedings, did not fulfill the requirement of proper notice to the dealer. As a result, the impugned order of assessment was set aside, granting the assessing authority the liberty to issue a fresh show cause notice and proceed with the assessment in adherence to the law. The tax revision case was allowed without costs, in favor of the petitioner.