Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

1. The appeal was heard, with consent of counsel for the parties. The
appellant, Commercial Tax Officer (hereafter called “the revenue”) is aggrieved
by the judgment and order of the Telangana High Court1
, by which a writ
petition filed by the respondent (hereafter “the assessee”) was allowed.
2. The assessee questioned the revenue, complaining that it did not provide
copies of assessment order for the years 2005-06, 2008-09, 2009-10, and 2010-
11 under the Andhra Pradesh General Sales Tax Act, 1957 (hereafter “APGST
Act”) and Telangana State Value Added Tax Act, 2005 (hereafter “VAT Act”)
1 Dated 28.09.2021 in WP No. 3703/2020
and for not lifting attachment order dated 03.02.2012 and another, revised
attachment order dated 20.02.2018 under Form V invoking the provisions of
Revenue Recovery Act, 1864 (hereafter “the RR Act”), under Section 27 of the
VAT Act. The revenue had issued assessment orders for the assessment years
(AYs) 2005-06 to 2008-09, 2009-10 and 2010-11, under which 1,88,81,000/-, ₹
₹ ₹ 2,38,84,000/- and 2,21,83,854/- was claimed respectively, as tax due and
3. The assessee argued, before the High Court that the revenue, despite
several requests, did not furnish assessment orders, and that it was not aware of
them. Since these orders were allegedly not served, the assessee submitted that
it was unable to examine their correctness and whether they conformed with the
provisions of the VAT Act, and further to enable it to avail remedies under the
statute. The assessee alleged that the notice dated 03.02.2012 in Form V under
the RR Act invoking Section 27 of the VAT Act for non-payment of arrears of
tax to the tune of 5,59,58,758/- and attaching its various properties, led it to ₹
bring to the notice of the authorities that the arrears so reflected in Form V were
erroneous. The assessee requested to cancel the said demand, since the
assessment orders for the year 2001-02 and 2003-04 were revised on
24.04.2005 resulting in excess tax collection; it requested that such excess tax
collected be adjusted for the subsequent demand. According to the assessee, the
revenue thereafter did not issue any further notice and after lapse of about six
years, issued a revised notice in Form V dated 20.02.2018 showing arrears of
tax in a sum of 5,59,78,758/- for the tax periods 2005-06 to 2008-09, 2009-10 ₹
and 2010-11 and attached land and building (belonging to the assessee) being
Sy. No.182 - H.No.7-3-52/1/2 situated at Gaganpahad village, Rajender Nagar
Mandal, Ranga Reddy district measuring 2,224.05 square yards. The assessee
relied on various representations2
 asking the revenue to cancel the demand and
attachment notices.
4. It was also urged that, though the assessee made several requests for
furnishing copies of assessment orders and also the date of service of such
orders passed, the revenue maintained silence, and provided neither. The
assessee therefore urged that without effecting the service of the assessment
orders, as mandated by law, the revenue could not claim tax shown as arrears,
and could not resort to provisions of the RR Act, attaching its properties.
5. The revenue, in its return, resisted the claim and urged that the assessee
engaged itself in the business of manufacturing and selling HR strips, sections,
and pipes and effected intra-state and inter-state sales. For AY 2005-06 to 2008-
09, it was issued with show cause notice in Form VAT 305A on 06.06.2009
proposing to raise a demand of 1,86,80,708/-. Objections were called for, from ₹
the assessee which were not filed till 06.07.2009. Consequently, assessment
orders were passed on 07.07.2009 confirming the tax demand as proposed in the
show cause notice. This assessment order was challenged before the High Court
 Dated 18.06.2018, 16.07.2018, 23.08.2018, 24.10.2018, 05.03.2019, 18.06.2019, and 04.11.2019.
in a writ petition3
; which was disposed of by the court on 15.04.2010 permitting
the assessee to file objection to the notice in VAT 305A dated 06.06.2009
within a period of six weeks from the date, on the condition that the assessee
deposited 20 lakhs within four weeks from 15.04.2010. However, no deposit ₹
of the amount within the period specified was made; the assessee also did not
file its objections to the show cause notice, as directed by the court. As a result,
the revenue issued proceedings dated 31.03.2011 confirming the demand of tax
in a sum of 1,86,80,708/- as arrived at by assessment order dated 07.07.2009. ₹
The revenue alleged that the said proceeding was served on one Mr. Pankaj
Agarwal, Director of the company on 31.03.2011 itself, which was duly
6. The revenue further contended that similarly for AYs 2009-10 and 2010-
11, assessments under VAT Act were finalized raising a demand of
₹ ₹ 2,38,84,812/- and 1,21,83,884/-. Since the assessee did not pay the tax due in
the normal course, an urgent notice dated 14.06.2011 was issued for payment of
₹5,50,58,758/- which included the arrears of tax payable for the earlier period
i.e., 2005-06 to 2008-09. It was claimed that this urgent notice was served on
Mr. Neeraj Agarwal, one of the Directors of the assessee company on the same
day. The arrears shown as due, were not paid, resulting in a demand notice in
Form IV dated 12.09.2011 under the RR Act, before attaching the assessee’s
properties. Since there was no response, or compliance, an attachment order
 W.P. No. 27331/ 2009
dated 03.02.2012 in Form V under the RR Act was issued. Even then the
assessee did not approach the revenue to seek any relief and instead remained
7. The revenue also urged that it became aware that the assessee’s banker,
Canara Bank, had issued a notification on 14.08.2011 bringing its immovable
properties for sale in public auction to recover the loans extended to it. Under
provisions of Section 25 and 26 of VAT Act, the tax arrears have a priority over
the dues of the bank. They provide for first charge over the properties of the
VAT dealer. Therefore, the revenue requested the petitioner’s banker not to
proceed with sale of the property, pursuant to the notification dated 14.08.2011
and also requested it to remit the sale proceeds towards the assessee’s tax
arrears, in case sale takes place in public auction. The revenue then approached
the High Court by filing a writ petition4
 to declare the notification dated
14.08.2011 issued by the bank, as illegal and contrary to the provisions of the
VAT Act. The assessee was arrayed as second respondent in that proceeding.
The revenue had specifically averred that the assessment orders were served on
the assessee and that those assessment orders had attained finality, resulting in
the demand of liability getting crystalized. The assessee did not object to those
averments by filing a counter affidavit denying the service of assessment order.
In that writ proceeding, after an initial interim order, the High Court, on
13.02.2015, permitted the assessee’s banker to proceed with the auction in
 W.P. No. 25943/2011
respect of its director’s properties, but continued the order of restraint of not
issuing confirmation of sale in respect of the company’s property mentioned at
serial Nos. 4, 5 and 6 of the notification dated 14.08.2011. As a result, the
revenue issued revised attachment notices in Form IV and V on 07.03.2015 and
27.04.2015 under the RR Act attaching the immovable property of the assessee
being land admeasuring 2,224.25 square yards and building standing thereon.
Even to the said revised attachment proceedings issued in Form IV and V there
was no response forthcoming from the assessee company. It was in these
circumstances that the revenue issued another notice of attachment dated
20.02.2018 in Form V, in respect of the property and served copy of the said
notice on Sri Pankaj Agarwal and Neeraj Agarwal i.e., Directors of the assessee
8. It was claimed that the assessee then for the first time, submitted
representation dated 18.06.2018 for furnishing certified copies of assessment
orders. Similar representations renewing the said request are stated to have been
made on 24.10.2018 and 05.03.2019. According to the revenue none of the said
representations, claimed that the assessment orders passed by the revenue were
not served and on the other hand it claimed that “the assessment orders are not
available with us and our factory is closed long back and above orders are not
traceable in our records”. The revenue averred that the allegation of not
furnishing of copies of assessment orders passed, was an after-thought, to
thwart the proceeding initiated by the respondent for recovery of tax dues. Nonservice of assessment orders was not raised in the earlier two writ proceedings
and this, it was contended by the revenue, demonstrated absence of bonafides.
9. The impugned order noticed that the VAT Act stipulates the manner and
method of service of notices and orders on the assessee; Rule 64 of the
Telangana VAT Rules5
 (“the rules”) prescribes the procedure thereunder. The
court held that an order by the revenue to be considered as validly served,
would have to be only in the manner prescribed under the Rules and that since
the assessee is a company, it was governed by Rule 64(1)(b) in terms of which
any notice or an order passed can be considered as validly served under any one
of the modes, namely - (i) if the same is personally served on the nominated
person; or (ii) it is left at the registered office of the person or person’s address
for service of notices under the Act; or (iii) it is left at or sent by registered post
to any office or place of business of that person in the State; and (iv) where it is
returned unserved, if it is put on board in the office of local chamber of
commerce or trader’s association. It was held that so far as the assessment order
5 “64. Mode of Service of orders and notices
(1) Unless otherwise provided in the Act, or these Rules, a notice or other document required or authorized
under the Act or these Rules to be served shall be considered as sufficiently served,-
(a) on a person being an individual other than in a representative capacity if,-
(i) it is personally served on that person ; or
(ii) it is left at the person’s usual or last known place of residence or office or business in the State; or
(iii) it is sent by registered post to such place of residence, office or business, or to the person’s usual or last
known address in the State; or
(b) on any other person if,-
(i) it is personally served on the nominated person ; or
(ii) it is left at the registered office of the person or the person’s address for service of notices under the Act; or
(iii) it is left at or sent by registered post to any office or place of business of that person in the State; (iv) where
it is returned unserved, if it is put on board in the office of local chamber of commerce or traders association.
(2) The certificate of service signed by the person serving the notice shall be evidence of the facts stated
dated 31.03.2011 for AY 2005-06 to 2008-09 were concerned, the material
placed on record showed that the order was served on the assessee, represented
by its Director Mr. Pankaj Agarwal, who was deponent to the affidavit in the
writ petition. The court held that the service of the order passed for AY 2005-06
to 2008-09 could not be called in question; since the assessee did not question
the assessment order, it has attained finality.
10. So far as AY 2009-10 and 2010-11 are concerned, the revenue’s
contention with respect to the admission by the assessee in its pleadings in the
previous writ petition was rejected:
“the said contention urged does not hold water, since the challenge in
the said Writ Petition filed by the respondent as petitioner was in
relation to a notification issued by the petitioner’s banker bringing to
auction the properties of the petitioner for recovery of loans advanced
to it wherein the respondent, as petitioner, sought to claim priority
over such assets being a crown debt. The dispute in the said Writ
Petition is primarily between the respondent as petitioner and the
bank. Thus, the claim of the respondent in the counter affidavit that
the petitioner herein did not choose to file a counter affidavit therein
raising the said plea would not preclude the petitioner from taking the
said plea in the present proceeding.”6
11. The impugned order also held that the revenue did not have record
evidencing the service of assessment order on the assessee for AY 2009-10 and
2010-11 by any of the modes prescribed under Rule 64(1)(b). It was noted that
Section 42 of the VAT Act mandates an assessee to maintain the record
minimum for a period of six years from the end of the year, however, the
revenue in whom the power of revision is vested, claimed that the record was
6 Paragraph 32 of impugned High Court judgment.
not traceable even though it had only been 10 years since the relevant period. It
was held that if such statement were to be accepted, it was not clear on what
basis revised notices in Form IV and V were issued on 07.03.2015 as well as
notice of attachment in Form V dated 20.02.2018 under the RR Act, claiming
arrears of tax from the assessee for the above said period. Noting that nothing
prevented the revenue from issuing certified copies of the orders pursuant to the
request made by the assessee on 18.06.2018 (just about four months after
revised Form V notice was issued on 20.02.2018), the assessee’s stance is
12. On the basis of this reasoning, the impugned judgment was delivered.
Since the revenue was unable to show how the service of assessment orders for
AY 2009-10 and 2010-11, was effected and when, the attachment notice issued
in Form V dated 20.02.2018 invoking the RR Act for recovery of a sum of
₹5,59,58,758/- was set aside. The court, however, clarified that it was open for
the revenue to initiate recovery proceedings afresh only to the extent of arrears
of tax due for the period 2005-06 to 2008-09 as crystalized under order dated
31.03.2011 in accordance with law, by excluding the tax arrears shown as due
for the period 2009-10 and 2010-11.
Contentions of parties
13. The revenue contends that the impugned order is in error. Its principal
submission is that the assessee was an established concern, and had, in the past,
occasion to contest its liability, even in respect of the same assessments. Notice
of this court is drawn to the previous writ petition initiated by the assessee,
whereby the court had remitted the matter for fresh consideration, and permitted
filing of objections, despite which the assessee did not participate in the
proceedings, leading to fresh orders. Likewise, it was submitted that when a
composite attachment order was made, and the revenue had gone to the court,
filing a writ petition, it had specifically stated the extent of the assessee’s
liabilities, which the latter did not dispute. It never alleged non-service of
orders, or that it was unaware of proceedings leading to those orders. In these
circumstances, its plea that it was not served with orders, could not be
entertained; even otherwise, that was not the subject matter of its
representations. Having regard to all these factors, the assessee was estopped
from contending that the attachment orders were vitiated in law.
14. Counsel for the assessee relied on the findings of the High Court, and
stated that the revenue’s arguments are meritless, with respect to service of
assessment orders. It was submitted that Rule 64, relied on by the High Court is
unambiguous, as every assessee has a right to expect service of assessment
orders upon it, to enable it to seek appellate or revisional remedies. Even
otherwise the correctness of assessment orders and their compliance with law,
required service of orders, in terms of the two enactments. Without resorting to
the precondition of such notice, the revenue could not have sought recourse to
the RR Act and attached the assessee’s properties. Therefore, the findings in the
impugned order were justified and in accordance with law.
Analysis and conclusions
15. The High Court’s reasoning is based entirely on the effect of Rule 64 of
the rules. There can be no doubt that when any statutory or administrative order,
visits a citizen or entity with adverse consequences, such an order has to be
served upon the concerned person; especially so, when that order is appealable
or subject to revision by higher authorities. That is the substance of the
requirement under Rule 64. The High Court, in the present case, drew a
distinction between two periods; for AY 2005-06 to 2008-09 it was held that the
assessments could not be called in question. So far as AY 2009-10 and 2010-11
were concerned, the court held that the attachment orders were invalid, since the
assessment orders were not served.
16. The findings of the High Court, on the facts would not normally have
required a second look by this court; however, the peculiar circumstances of this
case compel scrutiny. After the disposal of the writ petition filed by the assessee
(on 15.04.2010) concededly, it made no attempt to file objections or even
deposit the amounts the court had required it to. As a regular dealer, it had filed
returns not only for AY 2005-06 to 2008-09 but also later periods (i.e., AY
2009-10 and 2010-11). However, if its contentions were to be believed, it made
no attempt to ascertain the fate of its assessments for those periods. More
importantly, the assessee’s banker had attached and sought to bring to sale, its
properties. At that stage, the revenue approached the High Court, seeking to
enforce its first charge, under provisions of the APGST Act and the Telangana
VAT Act; the assessee was a party (second respondent) in those proceedings. In
those proceedings, specifically, the liabilities of the assessee were pleaded. It
however did not deny those averments, nor contended that the assessment
orders were not served upon it. Further, it alleged that its representations
seeking copies of assessment orders were not replied to by the state. The
revenue however, pointed out to the High Court, that the representations never
alleged that assessment orders were not served and that the attachments were
therefore not compliant with provision of law.
17. In Amina Bi Kaskar (D) by LRs. v. Union of India & Ors.7
this court had
occasion to deal with complaints of non-service of notice, which led to
forfeiture of property. The court held that the conduct of the party is relevant,
and in the facts of that case, denied relief:
“16. In the light of the aforementioned finding of fact recorded by the
Tribunal and affirmed by the High Court, we do not consider it
necessary to examine the question though vehemently argued by Dr
Rajeev Dhavan, learned Senior Counsel for the appellants, namely,
whether in a given case service of the order on the appellants' lawyer
is proper or not and whether the service on the appellants' minor
daughter was in accordance with the procedure prescribed under
Section 22 of SAFEMA or not.
17. If the appellants had the knowledge of the order passed against
them and which they admit to have as per their own admission
mentioned above, pursuant to which they filed appeals, then in our
opinion, so-called irregularity in the manner of effecting the service of
 (2018) 16 SCC 266
the order on them, etc. was of no consequence and cannot be termed
as illegal per se (if found to exist though denied by the Revenue).”
In Sri Budhia Swain & Ors. v. Gopinath Deb & Ors.8
similarly, the court
observed as follows:
“As already noted the appellants sought for review or recall of the
order from the O.E.A. Collector solely by alleging that the notice
which was required to be published in the locality before settling the
land in favour of the respondent No. 1 was not served in accordance
with the manner prescribed by law. The appellants did not plead 'nonservice of the notice' but raised objection only with regard to 'the
manner of service of the notice'. The High court had called for and
perused the record of the O.E.A. Collector and noted that the notice
was issued on 15.12.1963 inviting public objection. The notice was
available on record but some of its pages were missing. The O.E.A.
Collector had noted in his order dated 23.2.1966 as under :-
‘It is only due to missing of some pages of the proclamationincluding the last page over which the report of the process
server was there, a scope was available to the objectors to
file this petition. Under the above circumstances, it is not
necessary to issue another proclamation and entertain
further objection since the case is being heard and going to
be finalised on 14.3.66.’
The O.E.A. Collector was satisfied of the notice having been
published. Assuming that the notice was not published in the manner
contemplated by law, it will at best be a case of irregularity in the
proceedings but certainly not a fact striking at the very jurisdiction of
the authority passing the order.
The Appellate Authority, i.e., the ADM has in his order noted two
other contentions raised by the appellants, viz., (i) the application for
settlement by the respondent No. 1 was not filed within the prescribed
time, and (2) the application should have been treated as an
application for lease and should not have been treated as a claim
None of the two pleas was raised by the appellants in their
pleadings. None of the two was urged before O.E.A. Collector.
Therefore, there was no occasion to consider those pleas. Still we may
make it clear that none of the two pleas could have been a ground for
recalling the order which was otherwise within the jurisdiction
conferred on the O.E.A. Collector...”
 [1999] 2 SCR 1189: (1999) 4 SCC 396
18. In the present case, arguendo if the assessee was unaware, in the first
instance regarding the issuance of assessment orders against it, at least when the
revenue filed a writ petition (W.P. No. 25943/2011) complaining about Canara
Bank’s proposal to auction the assessee’s properties, it had impleaded the
assessee too. In the pleadings, there was a specific mention about the
assessment orders, them having become final, and why those demands had to be
given primacy as revenue dues, over and above the bank’s dues. The assessee
was served in those writ proceedings; however, it did not dispute the revenue’s
contention. This, in the opinion of the court is a telling aspect, as it highlights
the assessee’s conduct in deliberately choosing to keep quiet, even when it
could have raised a grievance.
19. Moreover, the assessee also did not dispute that it had not received the
copies of assessment orders, in those writ proceedings. Further, it did not seek
copies of the assessment orders, in the representations addressed to the revenue
after the second attachment order was issued, on 20.02.2018. In these
circumstances, the assessee’s contentions that the attachment orders were
unenforceable, because the assessment orders were not served on it, are
untenable. The High Court, with due respect, fell into error, in holding that
since the subject matter of the revenue’s writ petition (W.P. No. 25943/2011)
was different, the assessee could not be faulted for highlighting that it had not
received a copy of the assessment order. In fact, the entire premise of that writ
petition was that the assessee owed tax dues, to the extent of 5,59,58,758/- and ₹
that the bank could not sell the assessee’s properties.
20. In the light of the foregoing discussion, the revenue’s appeal has to
succeed. The impugned judgment and order are therefore, set aside. As a result,
the attachment notice in Form V dated 20.02.2018, is revived and it is open to
the revenue to recover the dues owed, as per the said notice. The present appeal
is allowed. There shall be no order on costs.
MARCH 15, 2023.


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