TMI Blog1977 (2) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... plicants for the said period 1st April, 1952, to 31st October, 1952, and reassessed them on the ground that they had suppressed certain sales effected by them. Against this order of reassessment the applicants filed an appeal to the Assistant Commissioner of Sales Tax (Appeals III), Bombay, and by his order dated 12th August, 1957, the said Assistant Commissioner set aside the said order of reassessment on the ground that the said notice under section 15 served on the applicants was of a period shorter than the one required under the said section. Thereupon on 11th October, 1957, the applicants were served with a fresh notice under the said section 15 by the said Sales Tax Officer. This notice was served upon one N. A. Merchant, the manager of the applicant-firm. The applicants appeared before the said Sales Tax Officer through their Advocate, and on 6th January, 1958, the Sales Tax Officer passed an order reassessing the applicants. In the appeal filed by the applicants against the said order the Assistant Commissioner of Sales Tax (Appeals IV), Bombay, by his order dated 9th February, 1962, reduced the quantum of suppressed sales arrived at by the said Sales Tax Officer and confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g covered within the meaning of entry 17 of Schedule I to the Bombay Sales Tax Act, 1946? (2) Whether, on the facts and in the circumstances of this case, the Tribunal was correct in law in holding that the notice under section 15 of the Bombay Sales Tax Act, 1953, served on Mr. Merchant, an employee of the concern, was a valid service in law? (3) Whether, on a true and correct interpretation of section 15 of the Bombay Sales Tax Act, 1953, the Tribunal was correct in law in holding that the assessment proceedings were valid in law, though the notice under the said section 15 was served on Mr. Merchant, an employee of the concern, and not on the dealer? (4) Whether, on the facts and in the circumstances of this case and upon proper construction of the second proviso to section 15 of the Bombay Sales Tax Act, 1953, did the Sales Tax Officer have jurisdiction to reassess the applicants after the order in appeal in respect of the same period was passed?" In our opinion, it will be convenient to deal with questions Nos. (2) and (3) first, because if the Tribunal was wrong in the view which it took and there was no valid service of the said notice under section 15 of the 1953 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Rules is the interpretation clause and defines certain terms used in the said Rules. The relevant portion of the said rule 2 was as follows: "2. Definitions.-In these rules, unless there is anything repugnant in the subject or context- (i) 'agent' means a person authorised in writing under clause (a) or (c) of section 43 to appear on behalf of a dealer or other person before any sales tax authority". Rule 46 of the said Rules provided that an authorisation given to an agent was to continue to be valid for the purpose of appearance in an appeal against, or application for revision of, any order passed in the proceeding in respect of which such authorisation was given. The proviso to that rule required a separate authorisation for appearance in proceedings relating to each separate period for which an order of assessment was to be made or had been made under section 14 of the 1953 Act. Chapter XI of the said Rules deals with service of notices. That chapter contained only one rule, namely, rule 47. The material provisions of rule 47 were as follows: "47. Notices.-(1) Notices under the Act or any rules made thereunder may be served by any of the following methods: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and that, in the present case, the service being contrary to law the Sales Tax Officer acquired no jurisdiction to initiate the said reassessment proceedings under section 15 or to reassess the applicants and that the said reassessment proceedings were invalid. To these submissions of Mr. Patel, the reply of Mr. Sanghavi, the learned counsel for the respondent, was that though a defect in a notice under section 15 of the 1953 Act would make the notice invalid and would not confer jurisdiction upon the Sales Tax Officer to initiate reassessment proceedings, the same principle did not apply to bad service and that if a dealer came to learn about the issue of such notice and appeared before the Sales Tax Officer, it was not open to him thereafter to object to the invalidity of the notice. Mr. Sanghavi further submitted that if a dealer desired to challenge the validity of the service of the notice and of the reassessment proceedings initiated in pursuance thereof, he could not do so by appearing before the Sales Tax Officer, but he should content himself with appearing only before the appellate authority and contending that the service of the notice was not proper, that is to say, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee came to learn about the issue of the notice at a later day and appeared before the reassessing authority. In M. O. Thomas v. Commissioner of Income-tax, Kerala[1963] 47 I.T.R. 775., a Division Bench of the Kerala High Court held that the notice prescribed by section 34 of the Indian Income-tax Act, 1922, could not be regarded as a mere procedural requirement and that if no notice were issued or if the notice issued were shown to be invalid, then the proceedings taken by the Income-tax Officer without a notice or in pursuance of such invalid notice would be illegal and void. The High Court further held that a notice may be invalid either because it was incorrectly issued or because it was improperly served, and the view that procedural defects would not invalidate a notice was not correct. This view has found favour with their Lordships of the Supreme Court in Commissioner of Income-tax, Kerala v. Thayaballi Mulla Jeevaji Kapasi[1967] 66 I.T.R. 147 at 150-151 (S.C.). The relevant observations of the Supreme Court in that case are: "Service of the notice under section 34(1)(a) within the period of limitation being a condition precedent to the exercise of jurisdiction, if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Here italicised. a part of the subordinate legislation, which derives its authority from the parent statute. To define "agent" as meaning a person authorised in writing under clause (a) or (c) of section 43 of the 1953 Act to appear on behalf of a dealer or other person before any sales tax authority, as clause (i) of rule 2 of the Bombay Sales Tax (Procedure) Rules, 1954, has done, is consistent with the scheme of the 1953 Act. Section 43 dealt with the question of appearance before any authority in proceedings under the 1953 Act. It provided as follows: "43. Appearance before any authority in proceedings.-Any person, who is entitled to attend before any authority in connection with any proceedings under this Act, may attend before the authority- (a) by a person authorised by him in this behalf being his relative or a person regularly employed by him, or (b) by a legal practitioner, or (c) subject to such conditions as may be prescribed, by an accountant or sales tax practitioner who possesses the prescribed qualifications." Thus, section 43 read with the said rule 2(i) required a written authority for appearance in proceedings by a relative or an employee of a dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59, which deals with reassessment, as amended with retrospective effect by Maharashtra Act No. 32 of 1972, speaks of giving the dealer a reasonable opportunity of being heard and not of service of a notice upon the dealer. Mr. Sanghavi further submitted that the interpretation we were giving to rule 47 of the Bombay Sales Tax Rules, 1953, would lead to unnecessary difficulty in service of notices and would result in evasion of such service. We are not impressed by this argument. Apart from the fact that the 1953 Act has been repealed with effect from 1st January, 1960, even under that Act if difficulty was found in serving a dealer personally, provision had been made for serving him by affixing the notice at his place of business or his last notified place of business as also by serving the notice by registered post. The simplest thing for the department in such cases would have been either to have served the notice by registered post or in case they wanted to save the expenditure of postage, to have affixed it on some conspicuous part of a dealer's place of business if satisfied that a dealer was evading service. Mr. Sanghavi next submitted that the definition of "agent" given i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to a serving officer to select one out of the modes of service specified in rule 47 as he thought fit. This is made amply clear by the phrase "be served by any of the following methods", which follows the word "may". In support of his submission Mr. Sanghavi also relied upon a decision of the Gujarat High Court in Commissioner of Income-tax, Gujarat I, Ahmedabad v. Bhanji Kanji's Shop[1968] 68 I.T.R. 416.In that case, the facts were that a notice under section 34(1) of the Indian Income-tax Act, 1922, was served upon a temporary agent of an assessee, who was not an authorised agent, for receipt of notices on behalf of the assessee. The assessee filed a return in pursuance of the notice, but did not raise any contention about the validity of the service of the notice, and an order of reassessment was passed. The assessee thereupon filed an appeal and, even in his petition of appeal, did not challenge the validity of the service of the notice upon him. Subsequently, however, he asked for leave to raise an objection urging that the notice was not validly served upon him, which leave was granted to him. The Gujarat High Court held that the two modes of service mentioned in section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1) is materially different from that of rule 47 of the Bombay Sales Tax (Procedure) Rules, 1954. Section 63(1) merely referred to service by post or in the manner provided by the Code of Civil Procedure, 1908. Rule 47 itself contained not only the different modes of service of notice but also detailed procedure in respect thereof to be adopted. Further, the said section 63(1) was a part of the statute itself, namely, the Indian Income-tax Act, 1922. Rule 47 was not a part of the 1953 Act, but was a piece of delegated legislation made in pursuance of the authority conferred by the parent statute upon the rule-making authority. We have already referred to the scheme of the 1953 Act and the Rules in this behalf and have pointed out that the intention of both the legislature and the rule-making authority was to provide for service of a notice upon the particular person or persons affected thereby, and once proceedings had started and such a person had authorised in writing another person belonging to the class of agents specified in section 43 to represent him, upon such a person. It may also be pointed out that in arriving at its decision the attention of the Gujarat High Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court observed as follows: "The notice prescribed by section 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid, then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. That is the view taken by the Bombay and Calcutta High Courts in Commissioner of Income-tax v. Ramsukh Motilal[1955] 27 I.T.R. 54. Here italicised. and R.K. Das Co. v. Commissioner of Income-tax[1956] 30 I.T.R. 439. and we think that that view is right." (The emphasis has been supplied by us.) Even assuming we are wrong in the interpretation we have placed upon rule 47 of the Bombay Sales Tax (Procedure) Rules, 1954, and further assuming that the word "agent" used in that rule meant an agent under the general law of agency, we must point out that no attempt whatever has been made by the department to show that the said Merchant was such an agent. Every employee in a business does not becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... life time and as such it is too late in the appeal to contend thereafter that the notice was not properly served on him. If he was to challenge the service of the notices before the Sales Tax Officer, probably the decision would have been different. I, therefore, reject this argument also." In connection with this contention of Mr. Sanghavi we have perused the orders of the different authorities and of the Tribunal, and we are constrained to observe that we have perused each of these orders with evergrowing amazement. The order of the Sales Tax Officer is a model of what an order of reassessment should not be. It starts with mentioning the place of business, the business which the dealer was carrying on, the books which were seized, the Sales Tax Officer's opinion that these were double sets of books of account, and then it states as follows: "Notice in form XIV under section 15 of the Bombay Sales Tax Act, 1953, bearing No. INV-738/55/B-7093 dated 9-10-57 is served on the dealer on 11-10-57 calling him to office on 30-10-57." (The emphasis* has been supplied by us.) The order then proceeds to state: "Gross turnover of sales The turnover of suppressed credit sales which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of attorney on behalf of the appellant (that is, the applicants) could receive notices issued in the name of the appellant. The answer to the question Is that notices can be served validly on such authorised agent......." We regret that a responsible officer like the Assistant Commissioner of Sales Tax should have shown such want of care in setting out facts in his appellate order, because the admitted position is that Merchant did not hold any power of attorney, much less a general power of attorney, from the applicants. This contention as to the Invalidity of the notice was reiterated by the applicants in their application for revision to the Deputy Commissioner of Sales Tax, and this is how that contention was dealt with by the Deputy Commissioner of Sales Tax: "This contention too appears to be clearly without force as Shri Merchant appears to be holding a general power of attorney from the firm and if that was so, service of notice on him would not vitiate the assessment proceedings." (The emphasis has been supplied by us.) We are taken aback that the Deputy Commissioner of Sales Tax has not even cared to ascertain whether the said Merchant in fact held a general power o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and not after his death could have made any difference to the position. On the record we find that there is no warrant for saying that the applicants acquiesced in the service of the notice upon the said Merchant or waived the point of invalidity of the said notice. On the contrary, we find that the applicants took up this contention right from the beginning. In this connection, we may also point out that in Commissioner of Incometax, Bombay City I v. Ramsukh Motilal, Bombay[1955] 27 I.T.R. 54 at 63., already referred to above, this High Court held as follows: "........ it is difficult to understand how there can be a waiver of the condition precedent, compliance with which alone can confer jurisdiction upon an authority or a tribunal. It is well-settled that no consent can confer jurisdiction upon a court if the court has no jurisdiction, and if we take the view that the Income-tax Officer can have jurisdiction only provided he complies with the conditions laid down in section 34 (of the Indian Incometax Act, 1922), then no consent by the assessee or no waiver on his part can confer jurisdiction upon the Income-tax Officer." To summarise our conclusions: (1) Und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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