Special tax recovery procedure upheld, but unexplained and inconsistent demand notices were quashed for want of reasoned determination.

Section 21 of the Bihar Sales Tax Act, 1959, which permits recovery by notice to debtors of a dealer, was upheld as not violating Article 14 because it was read with an implied duty on the prescribed authority to consider the dealer's objection and amend or revoke an incorrect demand. The availability of objection, appeal, revision, and writ remedies was treated as adequate procedural protection. However, the impugned recovery order and revised notice failed because the demand figures were inconsistent, unexplained, and not dealt with in a reasoned manner. The order was quashed and the matter remitted for fresh consideration of the objection in accordance with law.

---

---

Issues: (i) whether section 21 of the Bihar Sales Tax Act, 1959, conferring a special mode of recovery by notice to debtors of the dealer, was unconstitutional as violating article 14 of the Constitution of India; (ii) whether the impugned order and revised notice issued under section 21 could stand when the prescribed authority gave no intelligible basis for the fluctuating figures of alleged dues and did not deal with the dealer's objection in a reasoned manner.

Issue (i): whether section 21 of the Bihar Sales Tax Act, 1959, conferring a special mode of recovery by notice to debtors of the dealer, was unconstitutional as violating article 14 of the Constitution of India

Analysis: The provision was tested on the footing that it allowed a special and apparently more drastic method of recovery. The determining consideration was whether the statute itself created hostile discrimination or an unguided power resulting in unequal treatment of similarly situated dealers. The Court held that the power under section 21 had to be read with an implied duty on the prescribed authority to consider the dealer's objection and to amend or revoke the notice if the demand was found incorrect. Once that safeguard was read into the provision, the special recovery mechanism did not create substantial discrimination merely because it was speedier or more effective for the State. The Court also treated the availability of objection, appeal, revision, and writ remedy as sufficient procedural protection.

Conclusion: section 21 of the Bihar Sales Tax Act, 1959 was upheld as constitutionally valid and not violative of article 14.

Issue (ii): whether the impugned order and revised notice issued under section 21 could stand when the prescribed authority gave no intelligible basis for the fluctuating figures of alleged dues and did not deal with the dealer's objection in a reasoned manner

Analysis: The record showed repeated and inconsistent demands with no explanation of how the figures were reached. The order rejecting the objection was cryptic and did not disclose any factual basis for the demand, while the revised notice itself differed materially from the figure mentioned in the order. In these circumstances, the authority failed to exercise the statutory power under section 21(2) in a lawful and reasoned manner, and the order could not be sustained.

Conclusion: the impugned order dated 1 April 1969 was quashed and the matter was remitted for fresh consideration of the dealer's objection in accordance with law.

Final Conclusion: the special recovery provision was upheld in principle, but the particular order under challenge was set aside for arbitrariness and lack of reasoned determination, with the matter sent back for a fresh decision on the objection.

Ratio Decidendi: a special statutory recovery procedure is not unconstitutional under article 14 if the affected dealer is afforded an opportunity to object and the authority is obliged to consider that objection; but a recovery order based on unexplained and inconsistent demands cannot stand.

---