2018 (4) TMI 888 - HC - VAT and Sales Tax

Service of notice - Whether in law and on facts, was the Tribunal right in setting aside the order of review dated 29.11.2012 holding that the notice in Form 309 issued in review proceedings was not properly served as per provisions of law hence no reason to go into genuineness of transactions? - Sub-section (2) of Section 27 of the Maharashtra Value Added Tax Act, 2002. Held that - Powers of the review under Section 25 of MVAT Act, 2002 cannot be exercised unilaterally. That before exercising such powers, service of valid notice is condition precedent. If such notice is not served on proper person in accordance with Rule 87(1) of the MVAT Rules, 2005, Reviewing Authority does not get jurisdiction to review the order - It is settled law that want of valid service of notice being a condition precedent and foundation of jurisdiction of Sales Tax Officer, mere participation of the Respondent-Dealer in review proceedings cannot validate the review proceedings. In the case in hand, the Respondent-Dealer was served by one of the modes contemplated under Rule 87(1)(a)(b)(c)(d) and (e) of the MVAT Rules, 2005. There is nothing on record to indicate that the authorities resorted to substituted service after having formed the opinion that the Respondent-Dealer could not be served by one of the modes contemplated under Rule 87(1) - reviewing authority, had not acquired jurisdiction to review its order dated 11.6.09 and cancel the registrations under both the Acts since inception i.e. 14.08.09, for want of valid service of notice. The finding recorded by the Tribunal in paragraph 37 that notice for review has not been properly served on the Appellant cannot be faulted with - appeal dismissed - decided against Revenue.

Summary

Issues:
Challenge to order of Maharashtra Sales Tax Tribunal in VAT Appeal Nos.336 and 337 of 2013 invoking sub-section (2) of Section 27 of MVAT Act, 2002 and sub-section (2) of Section 9 of CST Act; Questions of law regarding setting aside of review order and service of notice; Second round of litigation; Validity of cancellation of registration certificates; Review powers exercised without proper service; Jurisdiction of Sales Tax Officer; Service of valid notice as a condition precedent; Want of valid service of notice; Participation in review proceedings; Finding of fraud and evasion; Appellant's submission of waiver of notice; Appellate review of Tribunal's findings; Applicability of legal principles regarding service of notice.

Analysis:

The Appellant challenged the order of the Maharashtra Sales Tax Tribunal in VAT Appeal Nos.336 and 337 of 2013 by invoking specific sections of the MVAT Act, 2002 and the CST Act. The Appellant raised questions of law regarding the setting aside of the review order and the service of notice. This case involved a second round of litigation, where the Respondent-Dealer had previously filed an appeal against the Tribunal's order. The Respondent-Dealer claimed to be a proprietor in electronic goods and had applied for cancellation of registration certificates, which led to a series of legal actions.

The Respondent-Dealer alleged that the cancellation of registration certificates was done without proper notice, as the official records showed a different cancellation date than what was communicated to him. The Respondent challenged the order of cancellation, leading to appeals and subsequent legal proceedings. The Court emphasized the importance of valid service of notice as a condition precedent for the exercise of review powers by the Sales Tax Officer.

The Court referred to legal precedents to establish that the lack of valid service of notice undermines the jurisdiction of the reviewing authority. The Tribunal's finding that the notice was not properly served on the Appellant was upheld. The Appellant argued that participation in the review proceedings amounted to waiver of notice, but the Court rejected this argument. Despite findings of fraud and evasion, the lack of jurisdiction due to improper notice service remained a critical issue.

Considering the facts and legal principles, the Court dismissed the appeals by the State, as no substantial questions of law were raised. The Court's decision highlighted the significance of proper service of notice in maintaining the jurisdiction of the reviewing authority and ensuring a fair legal process. The legal analysis focused on established principles regarding the service of valid notice and its implications on the jurisdiction of the Sales Tax Officer.