Draft assessment non-compliance is only an irregularity, not a nullity, and does not by itself justify a tax refund.

Non-compliance with the draft assessment requirement under section 46A of the Gujarat Sales Tax Act, where the proposed tax liability exceeded the prescribed limit, did not deprive the assessing authority of initial jurisdiction under section 41. The defect went only to the mode of exercise of that jurisdiction and made the assessment irregular, not void ab initio. The appellate authority could therefore set aside the assessment and remit the matter for fresh assessment in accordance with law. Because the order was not a nullity, the dealer could not claim refund of the tax remitted merely on the basis of the procedural breach.

---

---

Issues: (i) Whether non-compliance with section 46A of the Gujarat Sales Tax Act, 1969, in not serving a draft assessment order where the proposed tax liability exceeded Rs. 25,000 rendered the assessment order void ab initio or only irregular, and whether the appellate authority could remand the matter for fresh assessment. (ii) Whether, on such facts, the dealer was entitled to claim refund of the tax remitted.

Issue (i): Whether non-compliance with section 46A of the Gujarat Sales Tax Act, 1969, in not serving a draft assessment order where the proposed tax liability exceeded Rs. 25,000 rendered the assessment order void ab initio or only irregular, and whether the appellate authority could remand the matter for fresh assessment.

Analysis: The assessment authority had initial jurisdiction to assess a registered dealer under section 41, and section 46A only regulated the mode of exercise of that jurisdiction in cases involving the prescribed monetary limit. Failure to serve the draft order did not denude the authority of subject-matter jurisdiction; it amounted to an irregular exercise of jurisdiction. An illegal assessment made without following the prescribed procedure could therefore be set aside in appeal and remanded for fresh assessment in accordance with law.

Conclusion: The assessment order was not void ab initio; it was merely irregular, and remand by the appellate authority was competent.

Issue (ii): Whether, on such facts, the dealer was entitled to claim refund of the tax remitted.

Analysis: Since the assessment order was not a nullity but only an irregular order liable to be corrected in appeal, the dealer could not treat the tax remitted as refundable merely on the basis of the procedural defect. The refund claim depended upon the order being void, which was not the legal position found by the Court.

Conclusion: The dealer was not entitled to claim refund of the tax remitted.

Final Conclusion: The reference was answered by holding that breach of the draft-order requirement under section 46A did not make the assessment a nullity, and the consequential refund claim failed.

Ratio Decidendi: Where a taxing authority has initial jurisdiction to assess, non-compliance with a mandatory procedural step in the mode of exercise of that jurisdiction renders the assessment irregular, not void, and the order may be set aside and remanded for fresh assessment.

---