JAGDISH PRASAD POORANCHAND Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THE petitioner, a partnership firm has two partners. It was registered as a dealer under the M. P. General Sales Tax Act, 1958. After duly furnishing the returns for the period from 4th November, 1975, to 22nd October, 1976, stock return was also filed. After paying the sales tax on the turnover, the firm discontinued its business and its registration was cancelled. In order to initiate assessment proceedings, the Sales Tax Officer served a notice on the petitioner. This notice was actually served on one Harishankar, son of Ramswaroop, one of the partners of the petitioner-firm. By this notice, the petitioner was required to appear before the S. T. O. on 11th April, 1979. One of the partners is alleged to have appeared on that date but he was assigned no other date in the order sheet and was orally ordered to appear on 30th April, 1979. It appears that the assessment was completed on 11th April, 1979, and the assessment order was passed treating the petitioner ex parte. The gross turnover shown in returns filed by the petitioner were accepted but certain deductions claimed on account of sales to registered dealers were not allowed. The petitioner was served with demand notice on 20th May, 1979. On 18th June, 1979, the petitioner applied under Section 45-A of the Act for setting aside the ex parte assessment on the ground of want of service of notice of assessment proceedings on any of the partners or the agent of the petitioner-firm. This application was rejected by the S. T. O. , vide its order (annexure E) as barred by time. A revision preferred before the Deputy Commissioner of Sales Tax has also been rejected, vide order dated 15th October, 1980 (annexure C ). All these orders refusing to set aside the ex parte assessment are challenged by the petitioner by this petition under Article 226 of the Constitution.

(2.) RELYING upon Rule 63 and Sub-rules (1), (7) and (10), of the M. P. General Sales Tax Rules, 1959, learned counsel for the petitioner submitted that the service of notice on Harishankar cannot be held to be good as Harishankar was neither the partner nor the agent of the partnership and therefore, the proceedings leading to assessment and the assessment made are entirely without jurisdiction. Learned counsel relied on a Full Bench decision of the Allahabad High Court reported in Laxmi Narain Anand Prakash v. Commissioner of Sales Tax [1980] 46 STC 71 (FB ). It was also submitted that before finally proceeding to best judgment assessment, a notice ought to have been given to show cause against the rejection of the petitioner's claim for exemption of certain sales of declared goods.

(3.) WE are of opinion that although the order rejecting the application under Section 45-A cannot be interfered with, the second contention has substance and must be accepted. It is true, as held by the Full Bench of the Allahabad High Court in Laxmi Narain Anand Prakash's case [1980] 46 STC 71 (FB), that absence of clue and proper service of notice to the initiation of assessment proceedings is without jurisdiction. In the present case, however, we notice that the return for the period under assessment itself was filed by Harishankar. Not only this, even earlier it is this Harishankar alone who had been acting before the sales tax authorities on behalf of the partner and was duly representing the firm. Under these circumstances, the S. T. O. committed no error in holding Harishankar as an "agent" of the petitioner-firm within the meaning of the term as defined under explanation below Sub-rule (7) of Rule 63 of the M. P. General Sales Tax Rules, 1959. Service on Harishankar was, therefore, proper.