Srinivasa Iyengar, J.
1. The petitioner is challenging the assessment order (exhibit D) made by the Commercial Tax Officer, Mysore City, III Circle, for the period 1st January, 1975, to 31st December, 1975, and the demand notice issued (exhibit C) dated 30th August, 1977. The second respondent, namely, the Commercial Tax Officer, II Circle, Mysore, has been made a party on the ground that the assessment proceedings are now transferred to him and he is now exercising the jurisdiction in respect of the petitioner.
2. The petitioner submitted a return as per exhibit A in which she disclosed a gross turnover of Rs. 10,38,901.87 and a taxable turnover of Rs. 10,01,952.67 and a tax liability of Rs. 36,966.22. The Commercial Tax Officer made an order purporting to be under section 12(2) of the Karnataka Sales Tax Act read with rule 18(2) of the Karnataka Sales Tax Rules. But from the order it is seen that he did not accept the return as complete and true. He arrived at the liability to tax at Rs. 60,117.15 and accordingly demand followed.
3. It may be mentioned here that the notice of demand and the copy of the order were served on the dealer on 24th October, 1977, and she sought to agitate the matter in appeal. But, on the ground of unexplained delay, the first appellate authority rejected the appeal and the further appeal to the Tribunal did not meet with any success.
4. The contention put forth by the learned counsel, Sri Indra Kumar, for the petitioner is that though the order purports to be under section 12(2), it is virtually an order of assessment under section 12(3) as there has been enhancement of the tax payable and the dealer should have been given an opportunity before making such an order, as is clear from the proviso to section 12(3), and therefore, there has been a violation of the principles of natural justice and also the statutory provision.
5. The petitioner noted in the return that in regard to the supplies made of sodium silicate, the tax was liable to be paid at 2 per cent and this was in respect of a turnover of Rs. 5,78,776.06 and, in respect of the rest of the taxable turnover shown she herself calculated the tax at 6 per cent. What the Commercial Tax Officer has done is that he calculated the tax at 6 per cent in respect of the entire turnover. The learned counsel for the petitioner submitted that the calculation of tax at 2 per cent was on the basis of the provisions of section 5(3-A) of the Karnataka Sales Tax Act and as the supplies had been made to Raja Soap Factory which was itself a registered dealer and the supplies had been consumed in the manufacture of finished products by the said factory. From the order of the Commercial Tax Officer, it is clear that he accepted that sodium silicate had been mainly sold to M/s. Raja Soap Factory, Mysore, and other dealers. In the circumstances narrated above it is clear that the Commercial Tax Officer ought to have notified the petitioner before enhancing the liability and [email protected] an opportunity to the dealer to make her representation in that behalf. It is clear that no such opportunity has been given. Accordingly the order is in clear violation of mandatory provision in the statute and violates the principles of natural justice. It is therefore liable to be quashed. Accordingly, the order of assessment (exhibit D) as well as the notice of demand (exhibit C) are quashed with liberty to the respondents to make a fresh assessment order after affording opportunity to the petitioner to make her representation and considering the same on merits.
6. Smt. Vanaja, the learned High Court Government Pleader, is permitted to file her memo of appearance within three weeks from today.
The department filed an appeal against the order of the learned single judge.
M. R. Achar, Government Advocate, for the appellants.
E. R. Indra Kumar, for the respondent.