2003 (2) TMI 197 - SC - VAT and Sales Tax

Supreme Court affirms de novo assessment direction in tax notice case, emphasizes natural justice principles

Commissioner of Sales Tax & Ors. Versus M/s Subhash & Company

The Supreme Court upheld the direction for de novo assessment by the Single Judge in a case concerning the validity of service of notice under the M.P. ... REASSESSMENT — PROVISIONS REQUIRING OPPORTUNITY TO BE GIVEN — NOTICE OF INITIATION OF PROCEEDINGS — AFFIXING NOTICE AT LAST ADDRESS KNOWN — NO RECORDING OF SATISFACTION THAT ASSESSEE WAS EVADING SERVICE Issues Involved:1. Validity of service of notice under the M.P. General Sales Tax Act, 1958.2. Compliance with Rule 63 of the M.P. General Sales Tax Rules, 1959.3. Violation of principles of natural justice.4. Direction for de novo assessment and the issue of limitation.Detailed Analysis:1. Validity of Service of Notice:The primary issue was whether the service of notice for re-assessment under Section 19(1) of the M.P. General Sales Tax Act, 1958 was valid. The respondent-assessee argued that the notices were not properly served, as they were affixed at his previous address without following the prescribed procedure under Rule 63 of the M.P. General Sales Tax Rules, 1959. The Assessing Officer had resorted to service by affixture because the respondent was not available at the given address. The revisional authority upheld the service by affixture as valid, but the High Court found procedural irregularities.2. Compliance with Rule 63:Rule 63 outlines the methods for serving notices, summons, or orders under the Act. The respondent contended that the Assessing Officer failed to record reasons for satisfaction that the respondent was evading service before resorting to affixture. The High Court agreed, stating that the procedural requirements under Rule 63 were not met, thereby violating the principles of natural justice.3. Violation of Principles of Natural Justice:The respondent-assessee claimed that the improper service of notice violated the principles of natural justice, as he was not given a fair opportunity to be heard. The High Court supported this view, leading to the direction for de novo assessment. The Supreme Court emphasized that non-issue or defective service of notice does not affect the jurisdiction of the Assessing Officer if a reasonable opportunity of being heard is otherwise provided.4. Direction for De Novo Assessment and Issue of Limitation:The Single Judge directed a de novo assessment, which was challenged on the grounds that it did not reserve the right for the respondent to raise the plea of limitation. The Division Bench held that the direction for de novo assessment without considering the limitation was improper. The Supreme Court clarified that Section 19(1) does not explicitly require a 'notice' but mandates a 'reasonable opportunity of being heard.' The Court concluded that the Single Judge was justified in ordering a de novo assessment, as the only interference was due to the alleged improper service of notice, not on the merits of the case.Conclusion:The Supreme Court allowed the appeal, upholding the direction for de novo assessment by the Single Judge. It emphasized that the principles of natural justice were not entirely violated, and the procedural irregularity did not invalidate the service of notice, provided a reasonable opportunity to be heard was given. The Court also clarified that no opinion was expressed on any aspect except limitation, and the respondent was free to raise other issues before the Assessing Officer.