IMPORTANT POINT
In tax matters defective service of notice does not affect the jurisdiction of the assessing officer. Appellate authority in appropriate cases can set aside the order and direct a de-novo assessment.

Headnote:M.P. General Sales Tax Rules, 1959-Rule 63-M.P. General Sales Tax Act, 1958-Section 19(1)-Re-assessment done under on the basis of notice served by affixation-Legal position as to notice-Single Judge s direction of de-novo assessment by an order of remand-Upset by D.B.-Whether correct? (No)-Appeal allowed -Case law discussed.
       Held : The emerging principles are:--
        (i) Non-issue of notice or mistake in the issue of notice or defective service of notice does not affect the jurisdiction of the assessing officer, if otherwise reasonable opportunity of being heard has been given:
        (ii) Issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard:
        (iii) If prejudice has been caused by non-issue or invalid service of notice the proceeding would be vitiated. But irregular service of notice would not render the proceedings invalid: more so, if assessee by his conduct has rendered service impracticable or impossible.
        (iv) In a given case when the principles of natural justice are stated to have been violated it is open to the appellate authority in appropriate cases to set aside the order and require the Assessing Officer to decide the case de novo.
       In the instant case, the learned Single Judge and the Division Bench have not considered the question of prejudice, grant of reasonable opportunity in the aforesaid perspective. In view of what has been stated in R.P. Dixit s case (supra), learned Single Judge was justified in directing de novo assessment by an order of remand. The direction was appropriate as the only ground on which the interference was made related to the violation of principles of natural justice by alleged improper service of notice. The Division Bench was not justified in upsetting the direction. The appeal is allowed but in the circumstances without any order as to costs. We however make it clear that no opinion has been expressed by us on any aspect except limitation. It shall be open to the assessee to raise all other issues before the Assessing Officer which shall be considered in the proper perspective and in accordance with law. (Paras 22, 23, 24 and 25)

JUDGMENT

Arijit Pasayat, J.-Leave granted.

2. The controversy involved in the present case lies with a very narrow compass and, therefore, a brief reference to the factual aspects would suffice.

3. Respondent-Subhash Kimtee (hereinafter referred to as assessee) was the proprietor of a concern known as M/s. Subhash and Company. He was registered as a dealer under the M.P. General Sales Tax Act, 1958 (hereinafter referred to as the Act ) w.e.f. 28.5.1973. The registration continued to be operative till 22.10.1987. The assessment periods to which the dispute relates are (a) 27.10.1981 to 15.11.1982, (b) 16.11.1982 to 4.11.1983 and (c) 5.11.1983 to 24.10.1984. The assessments were originally completed for the assessment years 1981-82, 1982-83 and 1983-84 vide orders dated 12.9.1984, 29.8.1985 and 29.8.1985 respectively. Respondent applied cancellation of the certificate of registration on 14.12.1987 and the same was cancelled w.e.f. 23.10.1987. The Assessing Officer initiated proceedings for re-assessment under Section 19(1) of the Act on the basis of information that the respondent had purchased iron and steel from M/s. Steel Terro, Indore and had enjoined certain benefits by issuing declaration forms in Form XII-J. The Assessing Officer was of the view that the benefits were not permissible in law and, therefore, there was short levy of tax and escapement of assessment. Accordingly, notices were issued for re-assessment in respect of the three years. The notices were issued on the address as indicated in the certificate of registration. It was indicated in the notices that the same may be pasted if the respondent-assessee was not available or he refused to accept the notice. Since it was learnt that the respondent-assessee was not residing at the address given, service by affixture was resorted to. Vide orders dated 13.12.1990, 13.12.1990 and 31.12.1990, re-assessments were done under Section 19(1) of the Act. On 23.4.1992, respondent-assessee challenged the orders of re-assessment by filing revision petition before the revisional authority at Indore under Section 39(1)(b) of the Act on the ground that the notices and the orders of re-assessment as well as the original assessment orders were not served on him, rendering the re-assessment proceedings illegal. The revisional authority vide 3 separate but common order dated 23.4.1993 dismissed the revision petition recording a finding that service in both the original assessments as well as re-assessment proceedings had been duly effected by affixture and the orders were valid.

4. It was noted that respondent s certificate of registration remained in force till he applied for cancellation on 14.12.1987. As the notices were issued for service at the address given in the registration certificate, there was nothing illegal.

5. Respondent-assessee filed a writ petition under Articles 226 and 227 of the Constitution of India, 1950 (in short the Constitution ) in the High Court of Madhya Pradesh, at Indore Bench on the ground that the procedure prescribed for service of notice as contemplated under Rule 63 of the M.P. General Sales Tax Rules, 1959 (in short the Rules ) has not been followed. Accordingly, the principles of natural justice were violated. He took a stand that after closure of business in October, 1980, he was appointed as a clerk, Grade II in Reserve Bank of India in November, 1980. Revenue contested the writ petition by filing a counter affidavit specifically stating that service had been duly effected at the last known address as per the registration certificate. There was a duty enjoined on the dealer under Section 32 of the Act to provide necessary information regarding change of address which has not been done by the respondent-assessee who continued to enjoy the benefits by issuing declaration forms by virtue of the certificate of registration up to 23.10.1987.

6. Learned Single Judge with reference to Rule 63 held that the service was effected properly inasmuch

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2003 Supreme(SC) 195

IMPORTANT POINTIn tax matters defective service of notice does not affect the jurisdiction of the assessing officer. Appellate authority in appropriate cases can set aside the order and direct a de-novo assessment.

Cases Referred (3)

IMPORTANT POINT
In tax matters defective service of notice does not affect the jurisdiction of the assessing officer. Appellate authority in appropriate cases can set aside the order and direct a de-novo assessment.