Allahabad High Court
M/S Flipkart India Pvt. Ltd. vs State Of U.P. And 3 Ors. on 29 February, 2016
Author: Tarun Agarwala
Bench: Tarun Agarwala, Vinod Kumar Misra
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No.37 Civil Misc.Writ Petition No. 80 of 2016 M/s Flipkart India Pvt. Ltd ........ Petitioner Versus State of U.P. & Others ......... Respondents And Civil Misc. Writ Petition No. 168 of 2016 M/s Flipkart India Pvt. Ltd ........Petitioner Versus State of U.P. & Others ......... Respondents Hon'ble Tarun Agarwala, J.
Hon'ble Vinod Kumar Misra, J.
(Per: Tarun Agarwala, J.)
1. The petitioner is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in trading of goods in the State of Uttar Pradesh. The petitioner applied for registration under Section 17 of the Uttar Pradesh Value Added Tax Act,2008 (hereinafter referred to as the Vat Act) as well as under the Central Sales Tax Act (hereinafter referred to as the Act) in the year 2011 indicating its principal place of business in the State of U.P. as "Cabin No.2, First Floor, G-15, Sector-3, Noida". The petitioner also indicated in the application form that the other address of the petitioner is in Banglore in the State of Karnataka. On 05.12.2013, the petitioner applied for change of principal place of business from "Cabin No.2, First Floor, G-50, Sector-3, Noida" to "D-510-513, Buffer Godown Compound, Devi Mandir Road, Dasna, Ghaziabad-201001" and requested the registering authority to amend the registration certificate accordingly. The petitioner contends that while applying for change of place of business, the petitioner had indicated that they had shifted to the new place of business on 20.01.2013. According to the petitioner, no action was taken on the petitioner's application inspite of a reminder being issued again on 11.02.2015.
2. The petitioner contends that in the year 2004 ex-parte assessment orders were passed by the assessing authority for the assessment year 2011-12, 2013-14 and 2014-15. According to the petitioner, no notice was served upon them, and that, on this ground, the appeals filed by the petitioner were allowed by orders dated 31.01.2015, 20.02.2015 and 30.05.2015. The assessment orders were set aside and the matter was remitted to the assessing authority to pass a fresh assessment order. The assessment proceedings for the aforesaid years is still pending consideration. The assessment orders were set aside on the ground that the petitioner had no notice of the assessment proceedings, inasmuch as their principal place of business had changed and that the summons were sent to the petitioner's old place of business.
3. The petitioner contends that pursuant to the ex-parte assessment orders for the assessment years 2011-12, 2013-14 and 2014-15, attachment notices were issued which were never served and thereafter the bank accounts of the petitioner were seized and an amount of Rs.27,65,18,303/- was withdrawn, which was equivalent to the tax assessed under the ex-parte assessment order. The petitioner contends that even though the appeals have been allowed and the assessment orders have been set aside, the amount has not been refunded till date.
4. The petitioner received garnishee notices for recovery of Rs.49,82,01,250/-. The petitioner being aggrieved by the method in which huge sums of money were being withdrawn by the respondents in such cavalier fashion by making ex-parte orders without giving due notice filed the present Civil Misc. Writ Petition No. 80 of 2006 questioning the action of the respondents in attaching the petitioner's bank account. The petitioner contends that before the matter could be heard by the Court the amount was withdrawn pursuant to the ex-parte assessment orders dated 15.12.2015. This Court, while entertaining the writ petition passed an order dated 02.02.2016 directing the petitioner to file an application for recall of the ex-parte assessment orders. Subsequently, writ petition no. 168 of 2016 was filed for the quashing of the ex-parte assessment orders dated 15.12.2015 passed under U.P.Vat Act and Central Sales Tax Act for the months of April to October, 2015 as well as the order dated 11.02.2016 by which the petitioner's recall application was rejected. The petitioner in this writ petition also prayed for the quashing of the order dated 02.09.2014, by which their application for change of place of business was rejected.
5. Since counter had already been filed in writ petition no. 80 of 2016 and no disputed facts were brought on record in writ petition no. 168 of 2016, the Court heard both the matters together.
6. We have heard Sri Tarun Gulati, the learned counsel along with Sri Nishant Misra and Sri Kishore Kunal, the learned counsels for the petitioner and Sri C.B.Tripathi, the learned Special Counsel for the State at length.
7. The application for change of place of business was rejected by an order dated 02.09.2014 on the ground that a belated application was filed, inasmuch as the petitioner shifted his place of business on 20.01.2013 without previous intimation and that the application for change of place of business was filed after 11 months on 05.12.2013. The impugned order further indicates that the petitioner did not give details of closure of its business at Noida nor filed the filing fee of Rs.20/-.
8. The ground urged by the petitioner is that no opportunity of hearing was provided. The impugned order is violative of Section 75 of the Vat Act read with Rule 33(1) and (3) of the U.P.Value Added Tax Rules (hereinafter referred to as the "Rules"). Further, the provision of Section 75 is not mandatory and that only an intimation is required to be given by the petitioner and that the said application cannot be rejected on the ground of delay. It was further contended that the petitioner was never served with the impugned order dated 02.09.2014 and that they only came to know for the first time when a counter affidavit in Civil Misc. Writ Petition No. 80 of 2016 was filed.
9. On the other hand, the stand of the respondent is, that the said order was served by affixation at the Noida address. Further, Section 75 read with Rule 33 of the Rules has no application, inasmuch as in the instant case since change of place of business in effect changes the jurisdiction of the assessing authority it becomes necessary to follow the procedure prescribed under Rule 6 of the Rules, especially Rule 6 (8) for which purpose previous written permission of the Commissioner is required. It was urged that since no previous permission was taken, the application for change of place of business could not be accepted.
10. In order to appreciate the submissions of the learned counsel for the parties, it would be appropriate to consider Section 17 of the Act. For facility, Section 17(1) and Section 17(14) of the Vat Act is extracted hereunder:
"17. Registration of dealers.-
(1) Every dealer liable to pay tax under this Act shall obtain registration certificate issued by the prescribed registering authority in the prescribed form.
.......................
(14)The registering authority, after considering any information furnished or otherwise received and after making such inquiry as it may deem fit, amend from time to time any certificate of registration which shall take effect:
(a) in the case of change in the name, ownership or place of business, or opening of a new place of business, from the date of the event necessitating the amendment whether or not information in that behalf is furnished within the time prescribed under section 75.
(b) in case of any addition or modification in the description of any goods or class of goods in the certificate of registration, from the date of event necessitating the amendment if information in that behalf is furnished within the time prescribed under section 75 and in any other case, from the date of receipt of request for such addition or modification by the registering authority or the assessing authority, as the case may be;
(c) in case of deletion of any goods or class of goods, from the date of order of deletion.
Provided that where in consequence of a change in the ownership of a business, liability for payment of tax of any dealer ceases, the amendment of the certificate of registration shall take effect from the date on which information in respect of such change is furnished under section 75.
Explanation (I) - Any amendment of a certificate of registration under this sub-section shall be without prejudice to any liability for tax or penalty imposable under this Act.
Explanation (II)-For the removal of doubts, it is hereby declared that where a registered dealer-
(a) affects a change in the name of his business; or
(b) is a firm and there is change in the constitution of the firm without dissolution thereof; or
(c) is a trustee of a trust and there is a change in the trustees thereof; or
(d) is a guardian of the ward and there is a change in the guardian; or
(e) is a "Hindu Undivided Family" and the business of such family is converted into a partnership business with all or any of the coparceners as partners thereof,
(f) is proprietor of a business and such business is succeeded by successor or successors of its proprietor on account of disability or death of such proprietor.
then merely by reason of any of the circumstances aforesaid, it shall not be necessary for the dealer or the firm the constitution whereof is changed, or the new trustees, or the new guardian or, the partners of such partnership business or successor or successors, as the case may be, to apply for a fresh certificate of registration, and on information being furnished in the manner required by section 75, the certificate of registration shall be amended."
11. The aforesaid provision clearly indicates that a dealer, who is required to pay tax under the Vat Act is required to obtain registration in the prescribed form. The prescribed form for applying for registration is Form No.VII. For facility, Form VII is extracted hereunder:
FORM -VII Department of Commercial Taxes, Government of Uttar Pradesh [See rule-32 of the UPVAT Rules, 2008] Application for Registration [Before filling the form read the instructions] To, Registering Authority, Receipt No. Date ...................................
Receipt No. Date Sir,
I-----------------------------------------------s/o, d/o, w/o-----------------------------status ------------------------,M/S(name of the firm) ------------------------------------------------------------------------------------------, hereby apply for the registration under Section-17 of UP Value Added Tax Ordinance, 2007 and allotment of Taxpayers' Identification Number. For the purpose of registration I furnish the particulars of business as follows:
1.Full Name of applicant
2. Full name of Applicant's father /husband
3. Applicant's present address P I N
4. Applicant's permanent address P I N Annnexures attached A-
Yes No B-
Yes No C-
Yes No D-
Yes No E-
Yes No DECLARATION I,................................................S/o, D/o, W/o ...................................Status................do hereby declare that the particulars given above are correct and true to the best of my knowledge and belief. I undertake to inform immediately to the registering authority/assessing authority in the Commercial Taxes Department of any change in the above particulars.
Date - Signature of the Applicant Place - Status Introducer (a registered dealer) Date- Signature- Place Name & Status- Firm's Name & Address- TIN
12. A perusal of the aforesaid form indicates that in Column No.6 the petitioner is required to indicate the principal place of business. For change of place of business, the dealer is required to apply in Form No.XII. Section 17(14) of the Act read with Rule 33 of the Rules requires the registering authority to make an enquiry on the correctness of the information given as it may deem fit and after due enquiry at the business premises amend the certificate of registration, which shall take effect from the date of necessitating the amendment. Section 17(14) (a) of the Vat Act clearly indicates that the amendment is required to be made irrespective of the fact whether or not the application was furnished within the prescribed time as provided under Section 75 of the Vat Act. Section 75 of the Vat Act provides information to be furnished by the dealer regarding change of business. For facility, Section 75 of the Vat Act is extracted hereunder:
"75. Information to be furnished regarding change of business.
If any dealer to whom the provisions of sections 17 and 18 apply:-
(a) transfers his business or any part thereof by sale, lease, leave,license, hire or in any other manner whatsoever, or otherwise disposes of his business or any part thereof; or
(b) acquires any business, whether by purchase or otherwise; or
(c) effects or comes to know of any other change in the ownership or constitution of his business; or
(d) discontinues his business or changes his place of business or warehouse or opens a new place of business or warehouse; or
(e) changes the name, style or nature of his business or effects any change in the class or description of goods in which he carries on his business, as specified in his certificate of registration; or
(f) enters into partnership or other association in regard to his business; or
(g) starts a new business or joins another business either singly or jointly with other persons; or
(h) in the case of a company incorporated under a statute effects any change in the constitution of Board of Directors; or
(i) effects any change in the particulars furnished in application for grant of registration certificate under section 17, he shall within thirty days of the occurring of any of the events aforesaid, inform the registering authority in the form and manner, as may be prescribed."
13. A perusal of Section 75 (d) of the Vat Act indicates that where a dealer changes his place of business he shall inform the registering authority in the form and manner as prescribed within 30 days. Rule 33 of the Rules provides the manner for providing the information regarding change of place of business. For facility, Rule 33 of the Rules is extracted hereunder:
"33. Information Regarding Change of Business.-
(1) The information regrding change of business under section 75, shall be furnished to the registering authority in Form XII along with form VII or VII-G, as the case may be, and shall be signed by the person referred to in sub-rule (6) of rule 32.
(2) The application under sub-rule (1) shall accompany the registration certificate and evidence regarding change of business.
(3) On receiving the information referred to in sub-rule(1) the registering authority or the assessing authority, as the case may be, shall verify the correctness of information and after making such enquiry as he may deem fit, including enquiry at business premises , pass appropriate order and make necessary amendment in relevant records including registration certificate as far as possible within a period of 30 days."
14. From the aforesaid, the information regarding change of business is to be furnished to the registering authority in Form No. XII along with the registration certificate and facts regarding change of business. Rule 33(3) of the Rules indicates that the registering authority shall verify the correctness of information after making such enquiry including enquiry at the business premises, and thereafter, make necessary amendment as far as possible in the registration certificate within a period of 30 days. For facility, Form No.XII is extracted hereunder:
"FORM-XII DEPARTMENT OF COMMERCIAL TAXES, GOVERNMENT OF UTTAR PRADESH (see rule-33 of the UPVAT Rules, 2008) Information regarding change of business To, The Registering Authority, Commercial Tax, Sector.......Circle.....................
Name/Trade name Address Taxpayer's Identification Number:
Sir, Due to the occurring of the following event/events on There was a change in the constitution of the firm.(Write down event/events from the list given below as may be applicable;) Please amend the certificate of registration accordingly.
Place:
Date:
Yours Sincerely, Signature Name Status:
List of events:
(a) Transfers his business or any part thereof by sale, lease, leave, license, hire or in any other manner whatsoever, or otherwise disposes of his business or any part thereof; or
(b) Acquires any business, whether by purchase or otherwise; or
(c) Effects or comes to know of any other change in the ownership or Constitution of his business; or
(d) Discontinues his business or changes his place of business or warehouse or opens a new place of business or warehouse; or
(e) Changes the name, style or nature of his business or effects any change in the class or description of goods in which he carries on his business, as specified in his certificate of registration; or
(f) Enters into partnership or other association in regard to his business; or
(g) Starts a new business or joins another business either singly or jointly with other persons; or
(h) In the case of a company incorporated under a statute effects any change in the constitution of Board of Directors; or
(i) Effects any change in the particulars furnished in application for grant of registration certificate under sec-17.
Details of annexures:
1. Registration Certificate.(Form-XI)
2. Proof of the occurrence of the event to the satisfaction of Registering Officer.
3. Form VII/VII-G duly filled along with required annexures.
4. Undertaking from sureties for treating Security furnished earlier valid for the purpose of amended constitution of firm in Form-XIII."
Rule 6 of the Rules is with regard to the jurisdiction of the assessing authority. For facility, Rule 6 is extracted hereunder:
6. Jurisdiction of Assessing Authority.-
(1) If a dealer carries on business within the limits of jurisdiction of only one Assistant Commissioner that officer shall be the assessing authority in respect of such dealer and the place where he carries on business shall be deemed to be his principal place of business.
(2) If a dealer other than a casual dealer carries on business within the limits of jurisdiction of more than one Assistant Commissioner he shall, within thirty days of the commencement of business, declare one of the places of his business as his principal place of business in Uttar Pradesh and shall intimate all the Assistant Commissioners within whose limits of jurisdiction his places of business are situated. The Assistant Commissioner within whose limits of jurisdiction the principal place of business so declared by the dealer is situated shall be the assessing authority in respect of such dealer.
Provided that in the case of any department of the Central Government or of a State Government or of a Company, Corporation, undertaking, Board and Federation carrying on business within the limit of jurisdiction of more than one Assistant Commissioner, the Commissioner or any officer authorized by him in this behalf may order that each Assistant Commissioner within whose jurisdiction such department, Company, Corporation, undertaking, Board and Federation is carrying on business shall be the assessing authority in respect of the place or places of business within the limits of his jurisdiction,or permit such Department, Company, Corporation, undertaking, Board and Federation to declare one place of business as the principal place of business in Uttar Pradesh in which case the Assistant Commissioner, within whose limits of jurisdiction such declared principal place of business is situated, shall be the assessing authority in respect of such Department, Company, Corporation undertaking, Board and Federation.
(3) If the principal place of business of a dealer other than a casual dealer is situated outside Uttar Pradesh and such dealer carries on business at only one place in Uttar Pradesh the Assistant Commissioner within whose limits of jurisdiction of the place of business in Uttar Pradesh is situated shall be the assessing authority in respect of such dealer.
(4) If the principal place of business of a dealer other than a casual dealer is situated outside Uttar Pradesh and such dealer carries on business at more than one place in Uttar Pradesh, he shall declare one of his places of business in Uttar Pradesh, as the principal place of business in Uttar Pradesh, within thirty days of commencement of business and shall intimate all the Assistant Commissioners within whose limits of jurisdiction his places of business are situated. The Assistant Commissioner within whose limits of jurisdiction the principal place of business so declared by the dealer, is situated shall be the assessing authority in respect of such dealer.
(5) If no declaration as required under sub-rule (2) or sub-rule (4) is made by a dealer within the time specified therein, the Commissioner or any officer not below the rank of joint Commissioner, authorized by him in this behalf shall determine the Assistant Commissioner who will be the assessing authority in respect of such dealer and his decision shall be final.
(6) If a dealer has no fixed place of business, the Assistant Commissioner within whose limits of jurisdiction he ordinarily resides shall be the assessing authority in respect of such dealer.
(7) In a case in which the driver or person-in charge of a vehicle carrying goods referred to in sub-section (1) of section 50, with the documents referred to in rule 58 to carry such goods out side the State and is found not to carry such goods outside the State, the Commissioner shall nominate the assessing authority for assessment and penal proceedings.
(8) No dealer, who has once made a declaration under above sub rules or who has failed to make such declaration within the time specified therein, shall be allowed to change the same or, as the case may be, to make a declaration except with the previous written permission of the Commissioner or any officer authorized by him in this behalf, and on such conditions as he may deem fit to impose.
(9) Whenever there is any doubt or if any of the sub-rules of this rule do not apply, the commissioner shall determine the Assistant Commissioner who will be the assessing authority in respect of a dealer, and his decision shall be final.
(10) Notwithstanding anything contained in any other sub-rule, in a case in which any dealer affects a change in his place of business on any day after the first day of an assessment year and as a result of which there are more than one assessing authorities for single assessment year, the assessing authority in respect of last segment of period of business during the assessment year shall be deemed to be the assessing authority for such whole assessment year.
(11) Except sub-rules (7) and (10), all other sub-rules shall,mutatis mutandis, apply to a railway container contractor, air cargo operator or courier service provider or an owner or person in charge of warehouse, cold storage or go-down who carry on such business of railway container contractor, air cargo operator or courier service provider or an owner or person in charge of warehouse, cold storage or go-down within the State."
15. Rule 6(1) provides that if a dealer carries on a business within the limits of a Assistant Commissioner, that Officer would become the assessing authority in respect of that dealer and the place where he carries on the business shall be deemed to be his principal place of business. Clause (2) of Rule 6 provides that where a dealer has more than two places of business, which are within the limits of the jurisdiction of more than one Assistant Commissioner, the dealer is required to declare one of the places of his business as his principal place of business in Uttar Pradesh and intimate the same to the Assistant Commissioner. This provision is essential as it fixes the assessing authority of the dealer for making the assessment. Similar is the provision in Rule 6(4) of the Rules. Rule 6(5) of the Rules provides that if no such declaration is provided by the dealer in sub-rule (2) or (4) of Rule 6, in which case, the Commissioner or any Officer authorized by him shall determine as to who would be the assessing authority of the dealer. Sub-rule (8) of Rule 6 on which the respondents are relying upon is that a dealer, who has made a declaration under the above sub-rules would be allowed to change his declaration, namely, the principal place of business only with the previous written permission of the Commissioner.
16. Relying upon Rule 6(8) of the Rules, the respondents contend that the petitioner made a declaration of his principal place of business under Rule 6(1) of the Rules and any change in the principal place of business requires a written permission from the Commissioner, which in the instant case was not done by the petitioner and, therefore, the petitioner's application for change of place of business filed under Section 75 of the Act read with Rule 33 of the Rules could not be allowed and was rightly rejected in view of non-compliance of Rule 6(8) of the Rules.
17. The contention of the learned counsel for the respondents is patently misconceived. Rule 6 of the Rules has no application in the instant case. The application for change of place of business was rightly filed by the petitioner under Section 75 of the Vat Act read with Rule 33 of the Rules in Form No. XII. The petitioner filed the application for amendment of his registration certificate, which it applied under Form No. VII and registration was granted. Column no.6 of Form No. VII required the petitioner to disclose his principal place of business in Uttar Pradesh with complete address. The application in Form XII only requires the petitioner to apply for amendment of its registration certificate for change of its principal place of business. The information given by the petitioner in Form No. VII was as per Section 14(1) of the Vat Act read with Rule 32 of the Rules. It is only this registration certificate that was required to be amended. The contention of the respondents that the information given by the petitioner could only be amended pursuant to a written permission from the Commissioner under Rule 6 (8) is patently misconceived, inasmuch as the declaration given by a dealer under Rule 6 (2) and Rule 6(4) is only given in the eventuality where a dealer has more than one place of business in the State of U.P. and therefore, it becomes necessary for the dealer to specify his principal place of business in order for the respondents to fix the assessing authority for that dealer.
18. In the instant case, no such declaration was given by the petitioner under sub-rule (2) or (4) of Rule 6 of the Rules. The application form of the petitioner in Form No. VII only required the petitioner to provide information of the principal place of business and that was at Noida. The other place of business indicated by the petitioner was at Banglore outside the State of U.P. Thus, the change of declaration required under sub-rule (8) of Rule 6 of the Rules, which requires written permission of the Commissioner was not required to be done by the petitioner. Rule 6 (8) has no application in the instant case and could not be relied upon by the respondents. The ground for rejecting the application for change of place of business on the ground that the application was filed belatedly is patently erroneous. The registering authority has not considered the provisions of Section 17 (14) (a) of the Vat Act, which makes it obligatory upon the registering authority to carry out the amendment irrespective of the fact that the application was not furnished within the prescribed period as provided under Section 75 of the Act. We further find that there is no finding that the petitioner is still or simultaneously carrying on his business at Noida as well as at Ghaziabad. In the absence of this finding, the application for change of place of business could not be rejected.
19. We are of the opinion that the word "shall" as provided under Section 75 of the Vat Act is not mandatory and is directory in view of section 17 (14) (a) of the Vat Act. We further find that the petitioner's application on the ground of non-furnishing Rs. 20/- as filing fees was not an incurable defect and that the same could have been cured. The registering authority could not reject the petitioner's application on this ground and should have allowed the petitioner to cure the defect. In view of the aforesaid, the order dated 02.09.2014 rejecting the petitioner's application for change of place of business was wholly illegal and therefore, cannot be sustained.
20. The petitioners have challenged the ex-parte provisional assessment orders for the months of April to October,2015 under the U.P.Vat Act as well as under Central Sales Tax Act on the ground that no notices were served. It was urged that inspite of having knowledge that the petitioner had changed its place of business from Noida to Ghaziabad, the respondents for reasons best known to them had sent the notices and affixed the same as well as the demand notices at the Noida address and made no attempt to serve the petitioner at the Ghaziabad address. The petitioner has also questioned the assessment orders on the ground that the assessing authority had no jurisdiction to make any assessment, which was outside his territorial jurisdiction.
21. In the counter affidavit the respondents admit that the earlier assessment orders for the assessment years 2011-12, 2013-14 and 2014-15 were set aside on the short ground that no notice was served upon the petitioner and that the notice was sent at the old place from where the petitioner had shifted his place of business. Inspite of this knowledge that the petitioner had shifted his place of business from Noida to Ghaziabad, the counter affidavit reveals that the process server submitted a report dated 07.12.2015 indicating that there was no Firm at the Noida address. The counter affidavit further reveals that on 08.12.2015, service of the summons was attempted at the Ghaziabad address and the process server records a note that one person who refused to divulge his name and who refused to receive the notices indicated that one Bishnoi who is not present at the moment would receive the notice. The counter affidavit further reveals that on 09.12.2015 the summons were served by affixation at Noida. The summons indicated that the date of hearing was 10.12.2015. The assessment order indicates that the first and last date of hearing was on 10.12.2015 and the ex-parte assessment orders were passed on 15.12.2015. It was urged by the learned counsel for the petitioner that there is no valid service of notice as per Rule 72 of the Rules and consequently, on this short ground, the assessment order cannot be sustained.
22. The respondents have tried to justify the assessment orders contending that proper service was made by refusal as well as by affixation and there was no illegality in the service of the summons. It was also urged that the petitioner has a remedy of filing an appeal against the assessment orders and that it was not necessary to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India.
23. Having heard the learned counsel for the parties, we are of the opinion that the rule of alternative remedy is not a bar for entertaining the writ petition. No doubt it is a rule of discretion but in the instant case, we are of the opinion that there would be a travesty of justice if we relegate the petitioner to the alternative remedy of an appeal. We are of the opinion that justice is required to be done at the earliest. We find that there is a total abdication by the respondents in adhering to the process of service of summons under Rule 72 of the Rules. Rule 72 of the Rules has been ignored and a procedure which is not known to law has been adopted. For facility, the Rule 72 of the Rules is extracted hereunder:-
72. Mode of service.-
The service of any notice, summons or order under the Act or the Rules may be affected by any of the following methods, namely:
(a) Service to be on dealer or person concerned in person when practicable, or on his agent-
Wherever it is practicable service shall be made on the dealer or person concerned in person, unless he has an agent empowered to accept service, in which case service on such agent shall be sufficient.
(b) Service on agent by whom dealer or person concerned carries on business-
In a case relating to any business or work against a person who does not reside within the local limits of the jurisdiction of the authority from which the notice, summons or order is issued, service on any manager or agent, who, at the time of service, personally carries on such business or work for such person within such limits, shall be deemed good service.
(c) Service on an adult member of dealer or concerned person's family-
Where in any case the dealer or person concerned is absent from his residence at the time when the service of notice, summons or order is sought to be effected at his residence and there is no likelihood of his being found at the residence within a reasonable time and he has no agent empowered to accept service of the notice, summons or order on his behalf, service may be made on any adult member of the family, whether male or female, who is residing with him.
Explanation- A servant is not a member of the family within the meaning of this rule.
(d) Person served to sign acknowledgement-
Where the process server delivers or tenders a copy of the notice, order or summons to the dealer or person concerned 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 an acknowledgement of service endorsed on the original notice, order or summons.
(e) Procedure when dealer or person concerned refuses to accept or cannot be found- Where dealer or concerned person or his agent or such other person as aforesaid refuses to sign the acknowledgement, or where the process server, after using all due and reasonable diligence, cannot find the dealer or person concerned who is absent from his place of business or residence at the time when service is sought to be effected on him and there is no likelihood of his being found within a reasonable time and there is no agent empowered to accept service of the notice or order or summons on his behalf, nor any other person on whom service can be made, the process server shall affix a copy of the notice, order or summons on the outer door or some other conspicuous place in the house in which the dealer or person concerned ordinarily resides or carries on business or personally works for gain, and shall then return the original to the authority from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed.
(f) Endorsement of time and manner of service-
The process server shall, in all cases in which the notice, order or summons has been served under clause (d), endorse or annex, or cause to be endorsed or annexed, on or to the original notice, order or summons, a return stating the time when and the manner in which the notice, order or summons was served, and the name and address of the person (if any) identifying the person served and witnessing the delivery or tender of the notice, order or summons.
(g) Examination of the process server-
Where a notice, order or summons is returned under clause(e), the authority shall, if the return under that rule has not been verified by the affidavit of the process server, and may, if it has been so verified, examine the process server on oath, or cause him to be so examined by another authority, touching his proceedings, and may make such further enquiry in the manner as it thinks fit: and shall either declare that the notice, order or summons has been duly served or order such service as it thinks fit.
(h) Simultaneous issue of notice or order or summon for service by post in addition to personal service-
(i) The authority shall, in addition to, and simultaneously with, the issue of notice, order or summons for service in the manner provided under this rule, also direct the notice, order or summons to be served by registered post, acknowledgement due, addressed to the dealer or person concerned, or his agent empowered to accept the service, at the place where the dealer or person concerned, or his agent, actually and voluntarily resided or carries on business or personally works for gain.
Provided that nothing in this sub-clause shall require the authority to issue a notice, order or summons for service by registered post, where, in the circumstances of the case, the authority considers it unnecessary.
(ii) when an acknowledgement purporting to be singed by the dealer or person concerned or his agent is received by the authority or the postal article containing the notice, order or summons is received back by the authority with an endorsement purporting to have been made by a postal employee to the effect that the dealer or person concerned or his agent had refused to take delivery of the postal article containing the notice, order or summons, when tendered to him, the authority issuing the notice, order or summons shall declare that the notice, order or summons had been duly served on the dealer or person concerned.
Provided that where the notice, order or summon was properly addressed, prepaid and duly sent by registered post, acknowledgement due, the declaration referred to this sub-rule shall be made notwithstanding the fact that the acknowledgement having lost or mislaid, or for other reasons, has not been received by the authority within thirty days from the date of issue of the notice, order or summon
(i) Substituted service-
(i) Where the authority is satisfied that there is reason to believe that the dealer or person concerned is keeping out of the way for the purpose of avoiding service, or that for any other reason the notice, order or summons cannot be served in the ordinary way, the authority shall order the notice, order or summons to be served by affixing a copy thereof in some conspicuous place in the office premises, and also upon some conspicuous part of the house (if any) in which the dealer or person concerned is known to have last resided or carried on business or personally worked for gain, or in such other manner as the authority thinks fit.
(ii) Where the authority acting under sub clause(i) orders service by an advertisement in a newspaper, the newspaper shall be a daily newspaper circulating in the locality in which the dealer or person concerned is last known to have actually and voluntarily resided, carried on business or personally worked for gain.
(iii) Effect of substituted service;-
Service substituted by the order of authority shall be as effectual as if it had been made on the dealer or concerned person.
(iv) Time for appearance to be fixed;-
Where service is substituted by the order of authority, the authority shall fix such time for the appearance of the dealer or the concerned person as the case may require.
(j) Service of notice, order or summon where the dealer or person concerned resides within the jurisdiction of another authority-
A notice, order or summons may be sent by the authority by which it is issued, whether within or without the State, either by one of its process server or by post to any authority having jurisdiction in the place where the dealer or person concerned resides.
(k) Duty of authority to which notice, order or summon is sent-
The authority to which a notice, order or summons is sent under clause (j) shall, upon receipt thereof, proceed as if it has been issued by such authority and shall then return the notice, order or summons to the issuing authority, together with the record (if any) of its proceedings with regard thereto.
(l) Service on dealer or person concerned in prison-
Where the dealer or person concerned is confined in a prison, the notice, order or summons shall be delivered or sent by post or otherwise to the officer in charge of the prison for service on the dealer or person concerned.
(m) Service on civil public officer or on servant of railway or local authority-
Where person concerned is a public officer (not belonging to the Indian military, naval or air forces), or is a servant of a railway or local authority, the authority may, if it appears to it that the notice, order or summons may be most conveniently so served, send it for service on the person concerned to the head of the officer in which he is employed together with a copy to be retained by the person concerned.
(n) Duty of a person to whom notice, order or summon is delivered or sent for service-
(i) Where a notice, order or summons is delivered or sent to any person for service under clause (l) or (m) above, such person shall be bound to serve it if possible, and to return it under his signature, with the written acknowledgement of the dealer or person concerned, and such signature shall be deemed to be evidence of service.
(ii) Where for any reason service is impossible, the notice, order or summons shall be returned to the authority with a full statement of such reason and of the steps taken to procure service, and such statement shall be deemed to be evidence of nonservice.
(o) Substitution of letter for notice, order or summon-
(i) The authority may, notwithstanding anything hereinbefore contained, substitute for a notice, order or summons a letter signed by the authority where the dealer or person concerned is, in the opinion of the authority, of a rank entitling him to such mark of consideration.
(ii) A letter substituted under sub clause (i) shall contain all the particulars required to be stated in a notice, order or summons, and, subject to the provisions of sub clause (iii), shall be treated in all respects as a notice, order or summons.
(iii) A letter so substituted may be sent to the dealer or person concerned by post or by a special messenger selected by the authority, or in any other manner which the authority thinks fit; and, where the dealer or the concerned person has an agent empowered to accept service, the letter may be delivered or sent to such agent."
24. Rule 72(a) of the Rules provides that the service of summons is required to be made on a dealer or a person concerned in person or his agent. In the instant case, the report of process server indicates that there was no Firm at the Noida address. At the Ghaziabad address, the process server met one person, who refused to divulge his name but clearly indicated as to which person would receive the notice. The process server, however, indicates service by refusal. In our opinion, the report of the process server is wholly illegal. There is no finding that the person who refused to accept the notice was a dealer or a person concerned in person or an agent empowered to accept the notice. In the absence of any report to this effect we are of the opinion that there is no valid service by refusal.
25. Admittedly, the Assessing Authority has no jurisdiction to effect service of summons outside his territorial jurisdiction. Territorial jurisdiction of the Assessing Authority was Noida. Ghaziabad was outside his territorial jurisdiction. Thus, the Assessing Authority could not serve the summons to the petitioner at Ghaziabad address through or his process server. The Assessing Authority was required to adopt the procedure as per clause (j) and (k) of Rule 72 of the Rules, which in the instant case was not followed. Under this sub clause, the Assessing Authority is required to send the summons to the assessing authority where the dealer resides and through that Assessing Authority the service is required to be effected. On this ground also, we hold that there is no proper service of the summons at the Ghaziabad address.
26. We also find that the affixation made under clause (e) of Rule 72 of the Rules was done at Noida address. This affixation at Noida was patently illegal and could not be held to be a proper notice by affixation, inasmuch as the respondents knew that the petitioner had shifted his place of business and there was no one at the Noida address. The respondents have not come with a stand that the petitioner is simultaneously carrying on his business at Noida as well as at Ghaziabad. In fact, the respondents admit that the petitioner has shifted his place of business from Noida to Ghaziabad.
27. Further, there is another aspect, namely, that clause (h) of Rule 72 of the Rules has not been followed which requires the summons to be sent by registered post acknowledgment due in addition to personal service unless dispensed with by the Assessing Authority. In the instant case, there is nothing to indicate that the assessing authority had dispensed with the service of summons by registered post.
28. In the light of the aforesaid, it is apparently clear that there was no valid service of summons and consequently, ex-parte proceedings were taken based on which ex-parte assessment orders were passed which can not be sustained and are liable to be quashed. Consequently, it is not necessary for us to go into the question as to whether the Assessing Authority at Noida had the territorial jurisdiction to make an assessment. It would be open to the petitioner to raise such question before the appropriate forum if fresh notices are issued.
29. The recall application for recall of the assessment order was rejected by the assessing authority on the ground that the application was filed beyond the stipulated period of 30 days since service of the assessment order by affixation was made on 17.12.2015 at Noida. The Assessing Authority had also rejected the recall application on the ground that the admitted tax of Rs. 3.3 crore was not deposited which is a mandatory requirement as per Section 32 of the Act. On this issue, we are of the opinion that Assessing Authority committed a manifest error in rejecting the recall application. For facility, section 32 is extracted hereunder:-
32.Power to set aside ex-parte order of assessment or penalty.-
(1) In any case in which an order of assessment or re-assessment or rejection of application for registration or order of penalty is passed exparte, the dealer may apply to the assessing authority within thirty days of the service of the order to set aside such order and re-open the case; and if such authority is satisfied that the applicant did not receive notice or was prevented by sufficient cause from appearing on the date fixed, it may set aside the order and reopen the case for hearing:
Provided that no such application for setting aside an exparte assessment order shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax to be due under this Act on the turnover of sales or purchases, or both, as the case may be, admitted by the dealer in the returns filed by him or at any stage in any proceeding under this Act, whichever is greater.
(2) Where an assessment order under sub-section (1) of section 25 is passed, exparte, the dealer may apply to the Assessing Authority within thirty days of the service of the order, to set aside such order and if such authority is satisfied that the dealer has filed the tax return and deposited the tax due according to the tax return within thirty days from the last day prescribed for filing such tax return, it may modify or set aside such order and also the demand notice, if any, issued thereunder.
(3) In any case in which any assessment or re-assessment has been made ex parte and-
(a) appeal under section 55 against such order has been dismissed as barred by time;
(b) in appeal before the Tribunal under section 57, order, passed by the Appellate Authority under section 55, has been confirmed; and
(c) Commissioner or Additional Commissioner designated by the Commissioner, after giving reasonable opportunity of being heard to the dealer, is satisfied that-
(i) dealer, at any stage during the period of assessment or reassessment proceedings, had no notice of initiation of such proceedings;
(ii) as a result of ex parte assessment or reassessment, without proper basis amount of tax has been levied;
(iii) undue hardship will be caused to the dealer if such assessed tax is realized from him; and
(iv) if, after giving reasonable opportunity of being heard to the dealer, tax is reassessed, demand created by earlier order of assessment or reassessment may stand reduced to a large extent, he may direct the assessing authority to set aside such ex parte order of assessment or reassessment and to make assessment or reassessment after affording reasonable opportunity to the dealer, if the dealer presents an application before the Commissioner within a period of sixty days from the date on which dealer receives the order passed by the Tribunal under section 57."
30. The said provision requires the recall application to be filed within 30 days of the order on the application for setting aside the ex-parte assessment order, which could only be entertained if it is supported by proof of deposit of the admitted tax by the dealer. In the instant case, we find that the assessment orders were served by affixation at the Noida address. The respondents knew very well that the petitioner had shifted its place of business. Therefore, affixation of the assessment order at the Noida address was of no avail. The limitation could not start from that date, i.e. the date of affixation as there was no valid service of the assessment orders upon the petitioner. The limitation of 30 days will start from the date when there is proper service of the order upon the petitioner on which date the petitioner gets knowledge about the assessment orders which in the instant case was lacking.
31. We also find that pursuant to the ex-parte assessment orders, a sum of Rs. 49.82 crores was realized after attaching the bank account which included the admitted amount of Rs. 3.3 crores. Therefore, the petitioner's application could not be rejected on the ground that the admitted tax of Rs. 3.3 crores was not deposited by the petitioner. Once the amount has been realized, it was not open to the petitioner to deposit any further amount. Consequently, the order dated 11.02.2016 rejecting the recall application could not be sustained.
32. For the reasons stated aforesaid, the ex-parte assessment orders dated 15.12.2015 passed by the assessing authority, respondent no. 3 for the period April to October, 2015 under U.P. VAT Act and Central Sales Tax Act are quashed. The garnishee notices dated 27.01.2016 and the subsequent proceedings initiated thereto by attachment of the bank account and withdrawal of the amount of Rs.49,82,01,250/- being wholly illegal and without any authority of law are also quashed. The order dated 11.02.2016 rejecting the recall application filed under Section 32 of the Vat Act being wholly erroneous is also quashed. The order dated 02.09.2014 rejecting the petitioner's application for change of place of business filed under Section 75 of the Vat Act read with Rule 33 of the Rules being wholly illegal is also quashed.
33. The Registering Authority is directed to process the application dated 05.12.2013 for change of place of business after permitting the petitioner to deposit the requisite fee and pass appropriate orders for amendment of the registration certificate within four weeks from the date of production of a certified copy of this order and intimate the petitioner at his principal place of business accordingly.
34. Since a huge amount of Rs.49,82,01,250/- has been withdrawn by the respondents from the petitioner's account without any authority of law, the respondents are not justified to retain this amount any further. We, accordingly, direct the Deputy Commissioner of Commercial Tax, Grade-II, Sector-2, Noida, respondent no. 3, to refund the amount of Rs.49,82,01,250/- along with interest as per section 40 of the U.P. VAT Act after adjusting the admitted tax of the petitioner within two weeks from the date of production of a certified copy of this order. Since we have quashed the assessment orders, it would be open to the Assessing Authority to make a fresh assessment in accordance with law after proper service of the notice upon the petitioner and after giving them an opportunity of hearing. In the event, notice is issued by respondent no. 3, it would be open to the petitioner to raise an objection with regard to the territorial jurisdiction and the competency of the said authority to make an assessment. If such an objection is raised, the authority will consider the same and pass an appropriate order.
35. Before parting, we must observe the manner in which the respondents have proceeded with the assessment and recovered the amount from the petitioner's Bank account in haste is deplorable and in gross violation of the provisions of the Act. We find that for the assessment years 2011-12, 2013-14 and 2014-15 ex-parte assessment orders were made without adequate service of notices upon the petitioner. These assessment proceedings were set aside in appeal on the short ground that the service of the summons were sent at the address where the petitioner was no longer carrying on its business. Inspite of this knowledge, the respondents chose deliberately to serve the notice for provisional assessment for the period April to October, 2015 upon the petitioner at the Noida address knowing fully well that the petitioner was not carrying any business from the Noida address. The respondents knew very well that the petitioner had shifted its place of business from Noida to Ghaziabad as they made a futile attempt to serve the notice at Ghaziabad but later for the reasons best known to them, chose deliberately to serve the notice by affixation at the Noida address. Such tactics adopted by the assessing authority in getting the service effected upon the petitioner was in gross violation of Rule 72 of the Rules.
36. We also find that the entire exercise of service was done within four days without taking recourse to the other mode of service, namely simultaneously service by registered post with acknowledgment due. The assessment order indicates that the first and last date of hearing of the assessment proceedings was 10.12.2015 and that the assessment order was passed on 15.12.2015. The counter affidavit reveals that the assessment order was served by attachment at the Noida address. This was done deliberately by the respondents so that the respondents could withdraw the amount through garnishee notices by exerting pressure upon the bank authorities. The Court gets an uncanny feeling that a deliberate attempt was made by the respondents to withdraw the money from the petitioner's bank account through dubious mean by passing ex-parte assessment orders and not allowing it to be served validly upon the petitioner. If in this cavalier fashion the Commercial Tax Department functions and withdraws huge sums of money without valid service, it would be difficult for big business houses to carry on their business. Such business houses would be forced to shift their business outside the State of Uttar Pradesh.
37. Consequently, the petitioners are entitled for cost. The writ petitions are allowed with cost amounting to Rs. 2,00,000/- (Rupees two lakhs only), which will be paid by the Commercial Tax Department to the petitioner within two weeks from the date of filing of a certified copy of this order. If the amount is not paid, it would be open to the petitioner to move an appropriate application in this petition.
38. It would be open to the Commercial Tax Commissioner, Lucknow to institute an enquiry and fix responsibility on the erring officer for recovery of the said amount.
Dt. 29.02.2016 MAA/-
(Vinod Kumar Misra,J.) (Tarun Agarwala,J.)