1. Dispute over the validity of property attachment under the Revenue Recovery Act due to alleged non-service of assessment orders under the VAT Act. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 )
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2023 Supreme(SC) 219
SUPREME COURT OF INDIA
S. Ravindra Bhat, Dipankar Datta, JJ.
THE COMMERCIAL TAX OFFICER & ORS. - APPELLANT(S)
VERSUS
NEERAJA PIPES PVT. LTD. - RESPONDENT(S)
Civil Appeal No. 760 OF 2023
Decided On : 15-03-2023
Advocates appeared:
For the Appellant(s) : M/S. Venkat Palwai Law Associates, AOR
For the Respondent(s): Mr. Chandan Mishra, Adv. Mr. M. Vijaya Bhaskar, AOR
For the Appellant(s) : M/S. Venkat Palwai Law Associates, AOR
For the Respondent(s): Mr. Chandan Mishra, Adv. Mr. M. Vijaya Bhaskar, AOR
Valid service of assessment orders is crucial for enforcing tax recovery measures such as attachment notices under relevant tax acts.
Headnote:TAX - Assessment Orders - APGST Act, 1957, VAT Act, 2005, Revenue Recovery Act, 1864 - The court discussed the provisions of the APGST Act, VAT Act, and RR Act. It emphasized the requirement for valid service of assessment orders upon the assessee to enable it to seek appellate or revisional remedies. The court highlighted Rule 64 of the Telangana VAT Rules which prescribes the procedure for service of notices and orders on the assessee. The judgment also considered the conduct of the party in relation to non-service of notice and its impact on legal proceedings.
Fact of the Case:
The appellant (revenue) appealed against a judgment allowing a writ petition filed by the respondent (assessee) challenging non-provision of assessment orders and attachment notices under various tax acts.Finding of the Court:
The High Court held that attachment notices for certain years were invalid due to non-service of assessment orders. However, it was open for the revenue to initiate recovery proceedings afresh for arrears due for specific years.Issues:
Validity of attachment notices due to non-service of assessment orders; Compliance with statutory provisions regarding service of notices and orders.Ratio Decidendi:
Valid service of assessment orders is essential for enforcing attachment notices; Conduct of parties in legal proceedings can impact claims related to non-service of notice.Final Decision:
The appeal was allowed, setting aside the impugned judgment and reviving the attachment notice dated 20.02.2018 for recovery by the revenue.Legal Category Hierarchy
Table of Contents
2. Assessee contends attachment is illegal due to non-service of assessment orders; Revenue argues assessee had knowledge of orders and is estopped from denying service. (Para 3 , 4 , 5 , 6 , 7 , 8 , 13 , 14 )
3. The court found the assessee's failure to dispute assessment orders in prior proceedings, despite being a party, demonstrated knowledge and lack of bonafides regarding non-service. (Para 15 , 16 , 17 , 18 , 19 )
4. Where a party has knowledge of an order and fails to challenge it in relevant proceedings, technical irregularities in service do not invalidate the order. (Para 17 , 18 , 19 )
5. Appeal allowed, High Court judgment set aside, and the attachment notice revived for recovery of tax dues. (Para 20 )
6. Is strict compliance with statutory service rules mandatory for the validity of an order if the party has actual knowledge?
While statutory rules generally mandate service of orders to enable appeals, if a party has actual knowledge of the order and fails to challenge it, technical irregularities in the manner of service are of no consequence and do not render the order illegal per se. (Para 15 , 17 , 18 , 19 )
7. How does the conduct of a party affect a claim of non-service of a legal notice?
The conduct of the party is highly relevant. If a party remains silent or fails to dispute the existence and finality of an order in related legal proceedings where such orders were specifically pleaded, they cannot later claim the proceedings were vitiated by non-service. (Para 16 , 17 , 18 , 19 )
8. Can a party challenge recovery proceedings based on non-service if they were aware of the underlying liability through other means?
No. If the party's conduct demonstrates they were aware of the assessment orders and the resulting liability—such as by participating in proceedings where those orders were mentioned without objection—the contention that attachment orders are unenforceable due to non-service is untenable. (Para 16 , 18 , 19 )
JUDGMENT :
S. RAVINDRA BHAT, J.
1. The appeal was heard, with consent of counsel for the parties. The appellant, Commercial Tax Officer (hereafter called “the revenue”) is aggrieved by the judgment and order of the Telangana High Court1[Dated 28.09.2021 in WP No. 3703/2020], by which a writ petition filed by the respondent (hereafter “the assessee”) was allowed.
2. The assessee questioned the revenue, complaining that it did not provide copies of assessment order for the years 2005-06, 2008-09, 2009-10, and 201011 under the Andhra Pradesh General Sales Tax Act, 1957 (hereafter “APGST Act”) and Telangana State Value Added Tax Act , 2005 (hereafter “VAT Act”) and for not lifting attachment order dated 03.02.2012 and another, revised attachment order dated 20.02.2018 under Form V invoking the provisions of Revenue Recovery Act, 1864 (hereafter “the RR Act”), under Section 27 of the VAT Act. The revenue had issued assessment orders for the assessment years (AYs) 2005-06 to 2008-09, 2009-10 and 2010-11, under which Rs.1,88,81,000/-, Rs.2,38,84,000/- and Rs.2,21,83,854/-was claimed respectively, as tax due and payable.
3. The assessee argued, before the High Court that the revenue, despite several requests, did not furnish assessment orders, and that it was not aware of them. Since these orders were allegedly not served, the assessee submitted that it was unable to examine their correctness and whether they conformed with the provisions of the VAT Act, and further to enable it to avail remedies under the statute. The assessee alleged that the notice dated 03.02.2012 in Form V under the RR Act invoking Section 27 of the VAT Act for non-payment of arrears of tax to the tune of Rs.5,59,58,758/-and attaching its various properties, led it to bring to the notice of the authorities that the arrears so reflected in Form V were erroneous. The assessee requested to cancel the said demand, since the assessment orders for the year 2001-02 and 2003-04 were revised on 24.04.2005 resulting in excess tax collection; it requested that such excess tax collected be adjusted for the subsequent demand. According to the assessee, the revenue thereafter did not issue any further notice and after lapse of about six years, issued a revised notice in Form V dated 20.02.2018 showing arrears of tax in a sum of Rs. 5,59,78,758/-for the tax periods 2005-06 to 2008-09, 2009-10 and 2010-11 and attached land and building (belonging to the assessee) being Sy. No.182 -H.No.7-3-52/1/2 situated at Gaganpahad village, Rajender Nagar Mandal, Ranga Reddy district measuring 2,224.05 square yards. The assessee relied on various representations2[Dated 18.06.2018, 16.07.2018, 23.08.2018, 24.10.2018, 05.03.2019, 18.06.2019, and 04.11.2019.] asking the revenue to cancel the demand and attachment notices.
4. It was also urged that, though the assessee made several requests for furnishing copies of assessment orders and also the date of service of such orders passed, the revenue maintained silence, and provided neither. The assessee therefore urged that without effecting the service of the assessment orders, as mandated by law, the revenue could not claim tax shown as arrears, and could not resort to provisions of the RR Act, attaching its properties.
5. The revenue, in its return, resisted the claim and urged that the assessee engaged itself in the business of manufacturing and selling HR strips, sections, and pipes and effected intra-state and inter-state sales. For AY 2005-06 to 200809, it was issued with show cause notice in Form VAT 305A on 06.06.2009 proposing to raise a demand of Rs. 1,86,80,708/-. Objections were called for, from the assessee which were not filed till 06.07.2009. Consequently, assessment orders were passed on 07.07.2009 confirming the tax demand as proposed in the show cause notice. This assessment order was challenged before the High Court in a writ petition3[W.P. No. 27331/ 2009]; which was disposed of by the court on 15.04.2010 permitting the assessee to
