2023 (3) TMI 688 - SC - VAT and Sales Tax

Lifting of attachment on properties - right to service of assessment orders - revenue averred that the allegation of not furnishing of copies of assessment orders passed, was an after-thought, to thwart the proceeding initiated by the respondent for recovery of tax dues - HELD THAT - The High Court s reasoning is based entirely on the effect of Rule 64 of the rules. There can be no doubt that when any statutory or administrative order, visits a citizen or entity with adverse consequences, such an order has to be served upon the concerned person; especially so, when that order is appealable or subject to revision by higher authorities. That is the substance of the requirement under Rule 64. The High Court, in the present case, drew a distinction between two periods; for AY 2005-06 to 2008-09 it was held that the assessments could not be called in question. So far as AY 2009-10 and 2010-11 were concerned, the court held that the attachment orders were invalid, since the assessment orders were not served. The findings of the High Court, on the facts would not normally have required a second look by this court; however, the peculiar circumstances of this case compel scrutiny. After the disposal of the writ petition filed by the assessee (on 15.04.2010) concededly, it made no attempt to file objections or even deposit the amounts the court had required it to. As a regular dealer, it had filed returns not only for AY 2005-06 to 2008-09 but also later periods (i.e., AY 2009-10 and 2010-11) - The revenue however, pointed out to the High Court, that the representations never alleged that assessment orders were not served and that the attachments were therefore not compliant with provision of law. In the present case, arguendo if the assessee was unaware, in the first instance regarding the issuance of assessment orders against it, at least when the revenue filed a writ petition complaining about Canara Bank s proposal to auction the assessee s properties, it had impleaded the assessee too - The High Court, with due respect, fell into error, in holding that since the subject matter of the revenue s writ petition (W.P. No. 25943/2011) was different, the assessee could not be faulted for highlighting that it had not received a copy of the assessment order. In fact, the entire premise of that writ petition was that the assessee owed tax dues, to the extent of ₹5,59,58,758/- and that the bank could not sell the assessee s properties. The revenue s appeal has to succeed - Appeal allowed.

Summary

Issues Involved:
1. Non-provision of assessment orders.
2. Legality of attachment orders.
3. Compliance with service of notice requirements.

Summary:

Non-provision of assessment orders:
The assessee argued that the revenue did not furnish copies of assessment orders for the years 2005-06, 2008-09, 2009-10, and 2010-11 under the APGST Act and VAT Act, despite several requests. The absence of these orders prevented the assessee from examining their correctness and availing remedies under the statute. The High Court noted that the VAT Act mandates service of notices and orders, and Rule 64 of the Telangana VAT Rules prescribes the procedure for such service. The court held that the assessment order dated 31.03.2011 for AY 2005-06 to 2008-09 was validly served on the assessee's director and had attained finality.

Legality of attachment orders:
The assessee challenged the attachment orders dated 03.02.2012 and 20.02.2018 issued under the RR Act for non-payment of tax arrears. The revenue contended that the assessee was aware of the tax demands and had not disputed them in previous proceedings. The High Court found that for AY 2009-10 and 2010-11, the revenue did not have records evidencing the service of assessment orders, making the attachment orders invalid. The court set aside the attachment notice dated 20.02.2018, but allowed the revenue to initiate fresh recovery proceedings for the period 2005-06 to 2008-09.

Compliance with service of notice requirements:
The revenue argued that the assessee had previously contested its liability and was aware of the assessment orders. The High Court's reasoning was based on Rule 64, which requires service of orders to enable the assessee to seek appellate or revisional remedies. The Supreme Court noted that the assessee did not dispute the revenue's contention about the assessment orders in previous writ proceedings and did not seek copies of the orders in its representations. The court held that the assessee's contentions were untenable and set aside the High Court's judgment, reviving the attachment notice dated 20.02.2018.

Conclusion:
The Supreme Court allowed the revenue's appeal, setting aside the High Court's judgment and reviving the attachment notice dated 20.02.2018. The revenue is permitted to recover the dues as per the said notice. No order on costs was made.