Prior notice before provisional assessment is mandatory; demand notices and penalty fail when the statutory notice is not served.

Rule 12 read with Rule 17(3) of the Andhra Pradesh General Sales Tax Rules, 1957 requires prior notice and an opportunity of hearing before a provisional assessment is made, and the same safeguard applies to the levy of penalty. Where no statutory notice was served before passing the provisional assessment order, the consequential demand notices could not be sustained. On that basis, the provisional assessment order and demand notices, including the penalty component, were held invalid and set aside.

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Issues: Whether a provisional assessment order and consequential demand notices, including levy of penalty, could be sustained when the statutory notice contemplated by the relevant rules had not been served before passing the order.

Analysis: Rule 12 read with Rule 17(3) of the Andhra Pradesh General Sales Tax Rules, 1957 requires notice and an opportunity to the dealer before a provisional assessment is made. The same requirement of prior notice governs the imposition of penalty. As the admitted position was that no such notice had been served before passing the provisional assessment order, the impugned demand notices could not be upheld.

Conclusion: The provisional assessment order and demand notices were invalid and were set aside.

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