Show-cause notice treatment upheld where tax demand was read down and jurisdiction objections had to be heard first.

A communication demanding tax was read down as a show-cause notice because it had proceeded on a unilateral conclusion without first giving the taxpayer an opportunity to object. The Karnataka HC held that jurisdiction of the Deputy Commissioner need not be finally decided at that stage, but the taxpayer was entitled to raise objections, including on the officer's authority and competence to act under Section 74 of the Karnataka Value Added Tax Act, 2003. The authority was required to decide jurisdiction first after granting a personal hearing, and then pass orders on the merits. No coercive step had yet been initiated.

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Issues: Whether the impugned communication demanding tax could be treated as a show-cause notice and whether the petitioner was entitled to an opportunity to raise objections on jurisdiction before any assessment or coercive action under Section 74 of the Karnataka Value Added Tax Act, 2003.

Analysis: The notice proceeded on a unilateral conclusion that tax was payable without first affording the petitioner an opportunity to object. The Court held that, at this stage, it was unnecessary to decide the Deputy Commissioner's jurisdiction finally. Since no demand notice or coercive step had been initiated and the endorsement granted time to reply, the notice could be read down as a notice to show cause. The petitioner was entitled to file objections, including on the authority and competence of the officer to act under Section 74, and the authority was required to decide jurisdiction first after granting personal hearing.

Conclusion: The impugned notice was treated as a show-cause notice, the petitioner was granted time to file objections, and the authority was directed to decide jurisdiction first and then pass orders on the merits.

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