Valid service under tax notice rules requires proof that the recipient was an authorised agent, not merely an employee.

Service of an assessment order and demand notice on a dealer's employee was not valid where the employee was not shown to be an authorised agent or person managing the business under Rule 77. The court distinguished a servant from an agent: mere employment does not establish authority to receive notice on the dealer's behalf, and service on a servant cannot be treated as service on an agent. Because agency was not proved, the alternative service argument under Rule 77-A did not arise for decision. Service was therefore held invalid against the dealer, and the assessee succeeded on the service issue.

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Issues: Whether service of the assessment order and demand notice on an employee who was not shown to be an authorised agent of the dealer was valid service under the applicable service rule.

Analysis: Rule 77 permitted service on the dealer, his manager or agent, or by the alternative modes specified therein. The person on whom service was effected was found only to be an employee or servant of the dealer, and there was no finding that he was managing the business or that he had been authorised, expressly or impliedly, to receive notice on the dealer's behalf. The distinction between a servant and an agent was material: a servant is under control as to how work is done, whereas an agent is authorised to act for the principal in dealings with third parties. The mere existence of employment did not establish agency for receiving notice, and service on a servant could not be treated as equivalent to service on an agent. The contention based on rule 77-A was not necessary to decide once agency itself was not established.

Conclusion: Service on the employee was not valid service on the dealer, and the answer to the first question was in the negative, in favour of the assessee.

Final Conclusion: The reference succeeded for the assessee on the issue of service, while the second question was left unanswered.

Ratio Decidendi: For valid service under the rule, notice to an employee is insufficient unless the employee is shown to be the dealer's authorised agent for receiving the notice.

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