Strict compliance with notice service rules required before ex parte penalty action can be sustained

Service of notice for penalty proceedings had to comply strictly with Rule 79(1)(a) of the Haryana Value Added Tax Rules, 2003, which limits valid service to specified persons connected with the dealer or household. A notice signed only by a friend, who was not within the authorised categories, did not amount to valid service, and a later process-server report could not cure that defect. Without proper service and a real opportunity of hearing, the ex parte penalty order could not stand. The adverse order was therefore unsustainable, while the authority was left free to proceed afresh after due notice and hearing in accordance with law.

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Issues: Whether service of notice for penalty proceedings was valid, and whether the ex parte penalty order could be sustained in the absence of proper service and hearing.

Analysis: Rule 79(1)(a) of the Haryana Value Added Tax Rules, 2003 permits service of notice only by delivery by hand to the dealer, his agent, a person regularly employed in connection with the business, or an adult family member residing with the dealer. The notice in question bore the signature of a friend, who did not fall within any of the authorised categories. The process-server report relied upon by the authorities was also dated much later than the penalty order and could not justify a finding of valid service. The references to the Code of Civil Procedure did not cure the defect, because the record did not establish service on an authorised person.

Conclusion: The penalty order was passed without valid service of notice and without affording an opportunity of hearing, and was therefore unsustainable.

Final Conclusion: The assessee succeeded, and the matter was left open for the authority to pass a fresh order after due notice and hearing in accordance with law.

Ratio Decidendi: Where the statute prescribes specific categories of persons on whom notice may be validly served, service on an unauthorised person does not satisfy the requirement of due process and cannot sustain an ex parte adverse order.

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