1984 (3) TMI 372 - HC - VAT and Sales Tax

Summary

Issues:
- Whether a written notice is necessary to be issued to the assessee while passing an order under section 10 of the Act when the assessee had not filed any return under section 7 of the Act read with rule 25?

Analysis:
The case involved a reference made by the Board of Revenue to the High Court regarding the necessity of issuing a written notice to the assessee before passing an order under section 10 of the Act when the assessee had not filed any return under section 7 of the Act. The assessee, a registered dealer under the Rajasthan Sales Tax Act, did not submit a return for the assessment year 1963-64. The assessing authority made a best judgment assessment and imposed penalties. The Board of Revenue set aside the assessment as no notice under section 10(1)(b) had been served on the assessee. The High Court was approached under section 15(3A) of the Act to resolve the question.

The counsel for the department argued that for a best judgment assessment under section 10, it is not mandatory to issue a notice, citing the provisions of section 10(1)(b) of the Act. The relevant section mandates that if no return is submitted by the dealer, the assessing authority shall assess the tax to the best of his judgment after making necessary inquiries. The counsel contended that the provision for issuing a notice in section 10(2) applies only when the assessing authority is not satisfied with a filed return. The High Court agreed with this interpretation, stating that the notice provision in section 10(2) is applicable only when the assessee has submitted a return and the authority is not convinced of its correctness.

The Court further analyzed the proviso to clause (b) of sub-section (1) of section 10, which requires giving the dealer a reasonable opportunity to prove the correctness of a submitted return. It was concluded that this proviso is applicable only when a return has been filed and does not extend to cases where no return has been submitted, and a best judgment assessment is necessary. The Court emphasized that while a fair inquiry is required before a best judgment assessment, it does not mandate issuing a written notice to the dealer. The inquiry can be conducted without a formal notice, such as by visiting the dealer's premises. In this case, since the assessee had not filed a return, the Court held that issuing a written notice was not necessary for passing an order under section 10 of the Act.

Ultimately, the High Court answered the reference in the negative, indicating that no written notice was required in the circumstances of the case. The judgment concluded with no order as to costs, resolving the issue raised by the Board of Revenue regarding the necessity of issuing a notice to the assessee for a best judgment assessment under the Act.