Mandatory service rules control ex parte tax assessments where alleged refusal of notice is not properly proved.

Service of notice was held not to be duly proved where the alleged refusal by the assessee's authorised representative was supported only by a process-server report and not by the mandatory statutory safeguards. The court held that refusal of service must be established in the prescribed manner, including verification on oath and further inquiry where required, and that the department could not cure the defect by later affidavits or explanations. As the foundation for the ex parte assessment was defective, the assessment and allied appellate orders were set aside.

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Issues: Whether the ex parte assessment and consequential orders were liable to be set aside for non-compliance with the mandatory procedure governing service of notice, including cases of refusal to accept service.

Analysis: The dispute turned on whether the notice allegedly refused by the assessee's authorised representative could be treated as duly served. The governing rules required more than a bare process-server report: where service is refused, the refusal must be proved in the manner prescribed, including verification on oath and further inquiry by the authority where necessary. The Court found that the authorities below relied only on the process-server's report and did not comply with the mandatory safeguards under the service rules. It further held that the Department could not improve its case by later affidavits or explanations when the original proceedings themselves did not satisfy the statutory requirements. In these circumstances, the foundation for the ex parte assessment was defective and the proceedings were rendered unsustainable.

Conclusion: The service of notice was not proved in the manner required by law, and the ex parte assessment and allied orders could not be sustained.

Final Conclusion: The revisions succeeded and the impugned assessment and appellate orders were set aside, with the substantive questions answered in favour of the assessee.

Ratio Decidendi: Where refusal of service is pleaded, the statutory procedure for proving such refusal must be strictly complied with, and an ex parte tax assessment based on an unverified or improperly proved process-server report is invalid.

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