Assessment must precede demand notice when returns are absent or unacceptable under sales tax rules.

Under the Kerala General Sales Tax Rules, 1963, Form 14D demand notices may be issued under rule 21(10) only where a dealer has filed a return and failed to pay the tax due on the returned turnover. If the return is not filed or is not acceptable, the assessing authority must first make an assessment under rule 21(9) and issue notice in Form 13. Direct issuance of Form 14D without an assessment and Form 13 notice is not in accordance with law and is liable to be quashed.

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Issues: Whether demand notices in Form 14D could be issued under rule 21(10) of the Kerala General Sales Tax Rules, 1963 without first making an assessment under rule 21(9) of the Kerala General Sales Tax Rules, 1963.

Analysis: Rule 21(7) requires a dealer whose turnover exceeds the taxable limit to file monthly returns and pay the tax due along with the return. If tax is not paid on the returned turnover, rule 21(10) permits issuance of a Form 14D demand notice. Where the return is not filed or is not acceptable, the assessing authority must proceed under rule 21(9), make an assessment, and issue notice in Form 13. In the present case, although the authority invoked rule 21(9), no assessment order was passed and no Form 13 notice was issued; instead, Form 14D demand notices were issued directly.

Conclusion: The demand notices were not in accordance with law and were liable to be quashed. The assessee succeeded, and the authority was directed to complete the assessment expeditiously if not already done.

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