Punjab-Haryana High Court
M/S. Daya Ram And Company vs State Of Haryana on 22 November, 2012
Bench: Ajay Kumar Mittal, G.S. Sandhawalia
VATAP No. 43 of 2012 1
IN THE HIGH COURT OF PUNJAB & HARYANA
AT CHANDIGARH
VATAP No. 43 of 2012 (O & M)
Date of Decision:- November 22, 2012
M/s. Daya Ram and Company ..............APPELLANT(S)
vs.
State of Haryana ...........RESPONDENT(S)
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
HON'BLE MR. JUSTICE G.S. SANDHAWALIA
Present:- Mr. Avneesh Jhingan, Advocate,
for the appellant.
Mr. Nitin Kaushal, AAG, Haryana,
for the respondent.
AJAY KUMAR MITTAL, J. (ORAL)
1. The appellant, in this appeal filed under Section 36 of the Haryana Value Added Tax Act, 2003 (hereinafter referred to as 'The Act') against the order passed by the Haryana Tax Tribunal, Chandigarh (hereinafter referred to as 'The Tribunal') in STA No. 932 of 2010-11 dated 13.10.2011, has claimed that the following substantial questions of law would arise for determination:-
"(i) Whether in the facts and circumstances of the case, the order of the Tribunal is a nonspeaking order?
(ii) Whether in the facts and circumstances of the case, a service of notice on an unknown person not related to the business of the dealer is a valid service of a notice?
(iii) Whether in the facts and circumstances of the case, the report of the Taxation Peon dated 07.11.2010 which has been relied upon in order dated 20.04.2010 is a legal evidence of service of notice?
(iv) Whether in the facts and circumstances of the VATAP No. 43 of 2012 2 case, the service of penalty notice during the assessment proceedings is of consequence specially when the penalty proceedings were not included in the assessment order and were kept separate?"
2. Briefly, the facts as narrated in the appeal, may be noticed. The appellant-dealer is a proprietorship concern registered under the Act and carrying on business in District Bhiwani. For assessment year 2006-07, the appellant had filed the quarterly returns and deposited the tax due. On the basis of information received by the Assessing Authority that certain sales had been made to Municipal Committee, the Assessing Authority initiated the assessment proceedings and vide order dated 29.03.2012, which was passed ex parte, had created a demand of `1,46,785/- by making additions to the gross turnover. The Assessing Authority had also recorded that penalty proceedings be initiated under Section 38 of the Act for which notice in Form N-3 be issued to the dealer for 20.04.2010.
3. None appeared on behalf of the appellant on 20.04.2010. The Assessing Authority, vide ex parte penalty order dated 20.04.2010 (Annexure P-2), levied a penalty of `2,69,956/- which was impugned by the dealer before the Joint Excise and Taxation Commissioner (Appeals), Rohtak on the ground that the order imposing penalty under Section 38 of the Act was without affording any opportunity of hearing to the appellant as no notice had been served upon it. The said appeal having been rejected, second appeal was carried to the Tribunal, which was dismissed vide order impugned herein dated 13.10.2011. This has necessitated the appellant to approach this Court claiming determination of substantial questions of law, as noticed above.
4. Learned counsel for the appellant submitted that under Rule 79 of the Haryana Value Added Tax Rules, 2003 (hereinafter referred to as 'The Rules'), notice could be served by delivery by hand to the assessee or his agent or a person regularly employed by him in connection with the business or any adult member of VATAP No. 43 of 2012 3 his family residing with him. It was submitted that notice for 20.04.2010 was never received by any of the aforesaid designated persons and the report of the process server, on the basis of which finding was recorded by the first and second appellate authority, was dated 07.11.2010 i.e. approximately 7 months after passing of the order of penalty. It was urged that in these circumstances, the order imposing penalty was in violation of the principles of natural justice and is required to be set aside.
5. Controverting the aforesaid averments, learned counsel for the State relied upon Rules 12 and 16 of Order 5 of Code of Civil Procedure and submitted that the notice had been validly served as the same was served on the agent of the appellant as his lawyer had asked one of his friends to sign the notice on behalf of the appellant. Reliance had also been placed upon judgment of Calcutta High Court rendered in Chaturbhuj Sohanlal vs. Messrs. Clive Mills Co. Ltd. reported as 1964 AIR (Calcutta) 241 in support of his submission.
6. After hearing learned counsel for the parties, the primary dispute that arises for consideration in this appeal is whether the service of notice on the friend of the appellant and the report of the process server dated 07.11.2010, in respect of penalty proceedings which had concluded on 20.04.2010 could form the basis for holding that the appellant had been validly served and the levy of penalty vide ex parte order dated 20.04.2010 was justified.
7. It would be expedient to reproduce Rule 79(1)(a) of the Rules which is relevant for determination of controversy involved herein, it reads thus:-
"METHOD OF SERVICE OF NOTICE AND SUPPLY OF COPY OF ORDER (Section 60) (1) Notice under the Act or these rules shall be served by one of the following method, -
(a) by delivery by hand a copy of the notice to the addressee or to his agent or to a person regularly employed by him VATAP No. 43 of 2012 4 in connection with the business in respect of which he is registered as a dealer or to any adult member of his family residing with the dealer;
8. A bare reading of the aforesaid provision clearly spells out that in order to have a valid service of notice under the Act or the Rules, one of the methods prescribed under Sub Rule (1)(a) of Rule 79 of the Rules is by delivery by hand to the assessee or to his agent or to a person regularly employed by him in connection with the business in respect of which he is registered as a dealer or to any adult member of his family residing with the dealer.
9. In the present case, it is not disputed that the notice bears the signatures of the friend of the appellant. This certainly does not fall within the array of the persons specified under Rule 79(1)(a) of the Rules. Further the report of the process server dated 07.11.2010, about seven months after the alleged service of notice, on which reliance had been placed by the Appellate Authorities also could not have formed the basis for rejecting the plea of the appellant. The notice had, thus, not been validly served upon the appellant.
10. In all fairness to learned counsel for the respondent-State, reference is made to rules 12 and 16 of Order 5 CPC which read thus:-
"12. Service to be on defendant in person when practicable, or on his agent.-- Wherever it is practicable, service shall be made on the defendant in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient.
16. Person served to sign acknowledgment.-- Where the serving officer delivers or tenders a copy of the summons to the defendant personally, or to an agent or other person on his behalf, he shall require the signature of the person to whom the copy is so delivered or tendered to VATAP No. 43 of 2012 5 an acknowledgment of service endorsed on the original summons."
11. Even under these rules, learned State counsel was unable to demonstrate that the service of notice on the friend of the appellant would fulfil the requirements envisaged thereunder. Adverting to the judgment relied upon, suffice it to notice that the same being based on individual factual matrix involved therein does not advance the case of the respondent-State.
12. Accordingly, it is held that the order dated 20.04.2010 passed by the Assessing Authority imposing penalty under Section 38 of the Act was without affording any opportunity of hearing to the appellant. Consequently, the substantial questions of law are decided in the manner indicated above. It is, however, observed that the Assessing Authority shall be at liberty to pass a fresh order under Section 38 of the Act after affording an opportunity of hearing to the appellant in accordance with law. The appellant shall appear before the Assessing Authority for further proceedings on 25.01.2013.
(Ajay Kumar Mittal)
Judge
22.11.2012 (G.S. Sandhawalia)
shivani Judge