1990 (4) TMI 279 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether service of notice on the dealer is a condition precedent for exercise of jurisdiction under Rule 12(2)(a) of the Central Sales Tax (Orissa) Rules, 1957.
2. Whether the order of assessment becomes invalid or without jurisdiction if the dealer appears before the assessing officer and participates in the proceedings without service of notice.
3. Whether there was any valid service of notice on the dealer in the present case.

Detailed Analysis:

Issue 1: Service of Notice as Condition Precedent for Jurisdiction

The court examined Rule 12(2)(a) of the Central Sales Tax (Orissa) Rules, 1957, which mandates that if the Commissioner is not satisfied with the returns furnished by a dealer, he must "serve on such dealer a notice" requiring attendance or production of evidence. The language of Rule 12(2)(a) is peremptory, indicating that service of notice on the dealer is a condition precedent for the Commissioner to exercise jurisdiction. The court referenced the Full Bench decision of the Allahabad High Court in Laxmi Narain Anand Prakash v. Commissioner of Sales Tax [1980] 46 STC 71, which interpreted similar language to mean that the entire process of sending and serving the notice is necessary. Consequently, the court held that service of notice on the dealer is essential for the Commissioner to have jurisdiction under Rule 12 of the Central Sales Tax (Orissa) Rules, 1957.

Issue 2: Effect of Dealer's Participation Without Service of Notice

The court concluded that non-service of notice takes away the jurisdiction of the assessing authority, and the dealer's appearance or participation in the proceedings does not confer jurisdiction. The principle of waiver or estoppel does not apply in such cases. The court cited the Full Bench decision of the Allahabad High Court in Mahabir Singh v. Narain Tewari AIR 1931 All. 490, which held that jurisdiction cannot be conferred upon a court by estoppel. Similarly, in Laxmi Narain Anand Prakash's case, it was held that improper service of notice invalidates the initiation of proceedings, regardless of the assessee's participation. The court distinguished this case from State of Orissa v. Sri Gurumurty Patra [1973] 31 STC 160, noting that the language of Rule 12(2) is imperative, unlike Section 12(5) of the Orissa Sales Tax Act, which requires reasonable opportunity of being heard. Thus, the court held that participation of the dealer without proper service of notice does not validate the proceedings or confer jurisdiction on the assessing officer.

Issue 3: Validity of Service of Notice on the Dealer

The court examined whether there was valid service of notice on the dealer in the present case. Under Rule 84 of the Orissa Sales Tax Rules, applicable to proceedings under the Central Sales Tax (Orissa) Rules, notice must be served on the manager or principal officer of the company. The petitioners asserted that no notice was served on the dealer, but the records indicated otherwise. The records showed that a notice in the prescribed form IV was issued to the dealer, and the dealer acknowledged receipt of the notice in an application dated November 6, 1980, requesting time to produce accounts. Further applications for extension of time were made, and the dealer appeared before the assessing officer with relevant books of accounts. Based on these records, the court concluded that there was valid service of notice on the dealer, and thus, the order passed by the assessing officer was valid.

Conclusion:

The court dismissed the writ petitions, holding that despite the legal requirement for service of notice and the implications of non-service, the records established that there was valid service of notice on the dealer. Therefore, the proceedings were not without jurisdiction, and the assessments were upheld.