Deemed acceptance of rectification application on statutory inaction renders subsequent demand notice unsustainable.

A rectification application filed under section 25(A) of the Karnataka Sales Tax Act was treated as accepted by operation of law because the respondent failed to decide it within the prescribed time. The statutory proviso entitled the assessee to deemed acceptance on inaction, and the Court did not examine the merits of the assessment dispute. As the rectification stood accepted, the subsequent demand notice for the assessment year 2004-05 was unsustainable and was set aside.

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Issues: Whether the rectification application filed under section 25(A) of the Karnataka Sales Tax Act, 1957 was deemed to have been accepted due to the respondent's failure to decide it within the prescribed time, and whether the demand notice could be quashed as a consequence.

Analysis: The rectification application had been filed under section 25(A) and the statutory proviso entitled the petitioner to the benefit of deemed acceptance where no decision was taken within time. On the record, the respondent had not acted on the application within the prescribed period. Without entering into the merits of the assessment dispute, the Court held that the statutory consequence of inaction had followed. The demand notice issued thereafter for the assessment year 2004-05 was therefore unsustainable.

Conclusion: The rectification application was treated as accepted by operation of law, and the impugned recovery notice was set aside in favour of the assessee.

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