1993 (4) TMI 300 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the notice issued under section 17 of the Andhra Pradesh General Sales Tax Act, 1957.
2. Jurisdiction of the 1st respondent in issuing the notice.
3. Compliance with legal requirements for issuing notices under section 17.
4. Applicability of judgments from other High Courts in determining the legality of the notice.
5. Justification for resorting to section 17 of the Act based on the conduct of the petitioner.

Detailed Analysis:

1. The petitioner challenged the notice issued under section 17 of the Andhra Pradesh General Sales Tax Act, 1957, arguing that the notice was illegal and without jurisdiction as the conditions specified in subsection (1) of section 17 were not met. The petitioner contended that the notice can only be issued when the dealer is in arrears of tax, interest, penalty, or fee, which become due only after assessment and demand notice. The petitioner emphasized that none of these conditions were satisfied in their case, rendering the notice invalid.

2. The Sales Tax Department, in response, provided details of the petitioner's transactions and alleged that the petitioner had deliberately suppressed inter-State turnover, leading to a provisional show cause notice and a final provisional order demanding a substantial amount of tax. The department justified the garnishee notice under section 17 based on the petitioner's conduct, which they deemed as fraudulent and non-compliant with the department's notices.

3. The petitioner's counsel cited judgments from other High Courts to support their argument, emphasizing that notice by affixture should only be a last resort after exhausting other modes of service. However, the court noted that the petitioner's appearance before the 1st respondent after the affixture of notice indicated that the petitioner was aware of the proceedings, justifying the use of affixture for subsequent notices.

4. The court distinguished the judgments cited by the petitioner's counsel, highlighting that the facts of those cases were different from the present case. The court emphasized the importance of considering the dealer's conduct in determining the validity of the notice under section 17. The court also referenced a judgment from the Gauhati High Court, supporting the use of garnishee proceedings for speedy recovery of tax from defaulting dealers.

5. Ultimately, the court found that the conduct of the petitioner aligned with that of a defaulting dealer, justifying the 1st respondent's action in issuing the notice under section 17. The court dismissed the writ petition, stating that there were no merits in the petitioner's arguments and rejecting the application for leave under article 134-A of the Constitution of India.

Overall, the court upheld the validity of the notice issued under section 17 of the Act, emphasizing the importance of considering the dealer's conduct in such cases and justifying the department's actions based on the circumstances of the case.