Prior notice and enquiry are mandatory before rectification enhancing assessment or forfeiture of alleged excess tax under sales tax law.

A statutory rectification that reduces a refund and enhances assessment requires prior notice and a reasonable opportunity of hearing under rule 50 of the Andhra Pradesh General Sales Tax Rules; a notice that does not disclose such a proposed enhancement is insufficient, so the rectification cannot be sustained. Forfeiture under sections 30-B and 30-C of the Andhra Pradesh General Sales Tax Act, 1957 depends on established jurisdictional facts, including collection of tax in excess of what is payable or in contravention of law, and requires enquiry and findings on those facts; absent such findings, the forfeiture order is unenforceable.

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Issues: (i) Whether the rectification reducing the refund and enhancing the assessment could be made without prior notice and opportunity of hearing under rule 50 of the Andhra Pradesh General Sales Tax Rules; (ii) Whether forfeiture of the amount could be sustained under sections 30-B and 30-C of the Andhra Pradesh General Sales Tax Act, 1957 without findings on the statutory conditions and without enquiry.

Issue (i): Whether the rectification reducing the refund and enhancing the assessment could be made without prior notice and opportunity of hearing under rule 50 of the Andhra Pradesh General Sales Tax Rules.

Analysis: The proviso to rule 50 requires notice of the proposed rectification and a reasonable opportunity of hearing before any rectification that has the effect of enhancing an assessment. The notice issued by the assessing authority did not disclose any proposal to rectify the assessment in a manner that would reduce the refund and enhance the tax liability. It therefore did not satisfy the statutory requirement of prior notice and hearing.

Conclusion: The rectification order could not be sustained under rule 50.

Issue (ii): Whether forfeiture of the amount could be sustained under sections 30-B and 30-C of the Andhra Pradesh General Sales Tax Act, 1957 without findings on the statutory conditions and without enquiry.

Analysis: Forfeiture under section 30-C depends on the existence of jurisdictional facts, including collection of tax in excess of the tax payable or collection in contravention of law, and the provision contemplates due investigation and findings on those facts. The impugned order contained no such findings and was passed without any investigation or enquiry into the factual basis required by the statute.

Conclusion: The forfeiture order could not be enforced under sections 30-B and 30-C.

Final Conclusion: The impugned order was held unsustainable on both the rectification and forfeiture grounds, but the matter was left to be processed afresh after notice and explanation in accordance with law.

Ratio Decidendi: A statutory rectification that enhances assessment requires prior notice and a reasonable opportunity of hearing, and forfeiture of alleged excess tax can be made only after the jurisdictional facts are established by proper enquiry and findings.

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