Valid reassessment notice and lawful remand upheld where prior service was unproved and factual issues needed further enquiry.

Where prior service of a reassessment notice is not proved, a fresh notice under section 21 of the U.P. Sales Tax Act is required before reassessment can proceed, and the fresh notice may be counted for limitation. The court treated the earlier notice as not duly served because the record did not clearly establish refusal by the assessee or an authorised agent, so the second notice was valid and the assessment was within time. It further held that the appellate authority lawfully remanded the matter because substantial factual issues, including absence of business activity and the basis of departmental information, had not been properly examined and further enquiry was warranted.

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Issues: (i) Whether the second notice issued under section 21 of the U.P. Sales Tax Act was valid and could be taken into account for computing limitation for completion of the assessment proceedings. (ii) Whether the appellate authority exercised its power of remand in accordance with law and in sound judicial discretion.

Issue (i): Whether the second notice issued under section 21 of the U.P. Sales Tax Act was valid and could be taken into account for computing limitation for completion of the assessment proceedings.

Analysis: The earlier notice was not treated as duly served because the process-server's report did not clearly show refusal by the assessee or his authorised agent, and the officer's endorsement did not establish valid service. In those circumstances, a fresh notice under section 21 was necessary before reassessment proceedings could continue. The second notice was therefore competent and could be counted for limitation under section 21(1).

Conclusion: The second notice under section 21 was valid, and the assessment order was within time.

Issue (ii): Whether the appellate authority exercised its power of remand in accordance with law and in sound judicial discretion.

Analysis: The appellate authority remanded the matter because the assessee had raised substantial factual pleas that had not been adequately examined, including the claim that no business was carried on during the relevant year and the challenge to the information relied upon by the department. As the assessee had not appeared before the Sales Tax Officer despite notice, the appellate authority considered it just to provide another opportunity for proper enquiry and rebuttal before final determination.

Conclusion: The remand was lawful and represented a proper exercise of judicial discretion.

Final Conclusion: The reference was answered against the assessee on both questions, and the department's position was upheld on validity of notice, limitation, and remand.

Ratio Decidendi: Where prior service of a notice is not shown to be valid, a fresh statutory notice is required before reassessment can proceed, and an appellate remand is proper where material factual issues were not satisfactorily investigated and further enquiry is needed in the interests of justice.

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