2003 (2) TMI 340 - SC - Companies Law

Whether the defects noticed in those notices had prejudiced the appellants? Held that - Appeal allowed. 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 issue of notice as prescribed in the Rules constitutes a part of reasonable opportunity of being heard. 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. As 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.

Issues Involved:
1. Validity of service of notice.
2. Procedural compliance under Rule 63 of the M.P. General Sales Tax Rules, 1959.
3. Principles of natural justice.
4. Impact of non-issue or defective service of notice on the jurisdiction of the Assessing Officer.
5. Direction for de novo assessment and the plea of limitation.

Detailed Analysis:

1. Validity of Service of Notice:
The core issue revolves around whether the service of notice to the respondent-assessee was valid. The Assessing Officer issued notices for re-assessment at the address provided in the registration certificate, which were served by affixture when the respondent was found absent. The respondent challenged this, claiming non-receipt of notices, thus rendering the re-assessment proceedings illegal.

2. Procedural Compliance under Rule 63:
Rule 63 prescribes the methods of serving notice. The learned Single Judge found that the Assessing Officer failed to record reasons for resorting to service by affixture. The Division Bench also noted that the procedure under Rule 63 was not followed correctly, which led to the conclusion that there was no valid service of notice.

3. Principles of Natural Justice:
The respondent argued that the principles of natural justice were violated due to improper service of notice. The learned Single Judge agreed, holding that the Assessing Officer did not comply with the procedural requirements, thus violating the principles of natural justice. Consequently, the writ petition was allowed, directing a de novo assessment.

4. Impact of Non-Issue or Defective Service of Notice on the Jurisdiction of the Assessing Officer:
The Supreme Court highlighted that non-issue or defective service of notice does not affect the jurisdiction of the Assessing Officer if reasonable opportunity of being heard is provided. The Court emphasized that the term "notice" encompasses a wide range of legal implications, including direct and definite statements of facts. It was noted that the procedural irregularity in serving notice did not invalidate the proceedings if the assessee had knowledge of the proceedings and was not prejudiced.

5. Direction for De Novo Assessment and the Plea of Limitation:
The learned Single Judge directed a de novo assessment due to the procedural irregularity. The Division Bench, however, found this direction untenable without reserving the right for the respondent to raise the plea of limitation. The Supreme Court clarified that whenever an order is struck down for violating principles of natural justice, the proceedings are left open for re-assessment. The Court affirmed that the learned Single Judge was justified in directing a de novo assessment, and the Division Bench erred in upsetting this direction.

Conclusion:
The appeal was allowed, affirming the direction for a de novo assessment by the learned Single Judge. The Supreme Court emphasized that the procedural irregularity did not invalidate the service of notice if reasonable opportunity was provided and no prejudice was caused to the assessee. The Court also clarified that the issue of limitation was not addressed, leaving it open for consideration by the Assessing Officer.

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