1980 (1) TMI 212 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of service of notice u/s 21 of the U.P. Sales Tax Act.
2. Jurisdiction of the assessing authority in the absence of valid notice.
3. Applicability of the principle of estoppel in taxation proceedings.

Summary:

1. Validity of Service of Notice u/s 21 of the U.P. Sales Tax Act:
The primary issue was whether the service of notice u/s 21 of the U.P. Sales Tax Act on a stranger (Om Prakash) could be deemed valid for the petitioner. The court noted that the notice was served on Om Prakash, who had no connection with the assessee's firm. Despite this, the assessee appeared on the hearing date. The Appellate Authority held that the service on Om Prakash was immaterial, and the proceedings were not invalidated.

2. Jurisdiction of the Assessing Authority in the Absence of Valid Notice:
The court examined the scope of Section 21, emphasizing that the service of notice is a condition precedent for the assessing authority to assume jurisdiction. It cited several precedents, including *Commr. of Sales Tax U.P. v. Sewa Singh Mangal Singh* and *Kishan Chand v. Commr., Sales Tax*, which established that the service of notice is jurisdictional and not merely procedural. The court reiterated that without a valid notice, the proceedings and any consequential orders are illegal and void, regardless of the assessee's knowledge or participation.

3. Applicability of the Principle of Estoppel in Taxation Proceedings:
The court addressed whether the participation of the assessee could cure the invalidity of the notice and confer jurisdiction on the assessing authority. It held that jurisdiction cannot be conferred by consent, acquiescence, or waiver. The court cited *Ledgard v. Bull* and other cases to support this principle. It was emphasized that estoppel does not apply to taxation proceedings, as established in *Commr. of Income Tax, Madras v. M. R. P. Firm, Muar*. The court concluded that the principle of estoppel cannot validate proceedings initiated without a valid notice.

Conclusion:
The revision was allowed, and it was held that the notice u/s 21 was improperly served, rendering the initiation of proceedings without jurisdiction. The participation of the assessee did not validate the proceedings. The assessee was entitled to costs assessed at Rs. 300/-, and the fee of the Standing Counsel was fixed at Rs. 300/-.