Satish Chandra, J. - From information gathered from various sales tax authorities, the Sales Tax Officer was of the opinion that for the assessment year 1964-65, the assessees turnover of purchases had escaped assessment to tax. The Sales Tax Officer issued notice to the assessee under S. 21 of the U.P. Sales Tax Act, fixing March 28, 1969 for hearing. This notice was served by affixation. The parties are in controversy as to what happened to March 28, 1969. The Departments case is that the assessee appeared on that date, applied for an adjournment which was granted and April 24, 1969 was fixed for hearing. The assessee appeared on April 24, 1969. On that day, his statement was recorded and, at the instance of the assessee, the case was adjourned to June 13, 1969. On this date, the assessee did not appear. The case was then fixed for November 29, 1969. Again the assessee did not appear. The case was ultimately fixed for January 9, 1970. Since the assessee did not appear on this date as well, the Sales Tax Officer considered the matter and passed an assessment order under S. 21 of the U.P. Sales Tax Act, determining the escaped turnover at Rs. 9 lacs on which tax liability of Rs. 15,000/- was fixed.
2. Aggrieved against this assessment order dated January 10, 1970, the assessee went up in appeal. He reiterated that no valid notice was either issued or served and that he did not appear on March 28, 1969. The proceedings were without jurisdiction. The determination of the escaped turnover was also challenged. The Assistant Commissioner also after stating in detail the submissions of the parties, held that in his opinion, service of the notice under S. 21 was valid. He found that the assessment order has not been framed after due consideration of all relevant aspects. He hence allowed the appeal and remanded the case for giving an opportunity of hearing to the assessee and then making a fresh order.
3. The assessee was not satisfied; he filed a revision. He challenged the validly of the notice. The Judge (Revisions) held that the service of notice was validly done by affixation, the assessee had full knowledge of the proceedings under S. 21 for which March 28, 1969 had been fixed. He had appeared on that date and had applied for an adjournment. The proceedings for reassessment were valid. The revision was accordingly dismissed.
4. At the instance of the assessee, the Judge (Revisions) has submitted this statement of the case, and has referred the following questions of law for the opinion of this Court;
(a) Whether there is any material on record on the basis of which it can be inferred that the applicant appeared on the date fixed for hearing on March 28, 1969 ?
(b) Whether the notice under S. 21 was validly served in accordance with Rule 77 ?
(c) If reply of question No. (a) is in the affirmative, whether the knowledge of the proceedings have the effect of vitiating the procedure provided for service of notice under Rule 77 ?
5. On the first question, the relevant facts found by the Judge (Revisions) are that though no notice fixing April 24, 1969 was issued or served, yet the assessee admittedly appeared on that date. In view of the fact that the assessee did appear on April 24, 1969 without any notice having been issued to him, the probability rather was that he appeared before the Sales Tax Officer on March 28, 1969 thereby acquired knowledge of the next date fixed in the proceedings, namely, April 24, 1969. The affidavit filed on behalf of the assessee that he had not appeared on March 28, 1969 nor had he moved any application for adjournment, was, it appears, disbelieved. The circumstances that the application for adjournment was not on record and that the order sheet also does not bear the signatures or thumb impression of the assessee in taken of his having appeared on March 28, 1969, were also discarded. The Judge (Revisions) was principally influenced by the fact that the assessee appeared on April 24, 1969 without any notice and, therefore, it was probable that he did appear on March 28, 1969 and applied for an adjournment on which April 24, 1969 was fixed.
6. The Judge (Revisions) had considered all relevant aspects and materials on record. The implication flowing from the fact that the assessee appeared on April 24, 1969 without any notice, did furnish material for the inference that the assessee appeared on March 28, 1969. It cannot hence be said that there was no material in support of this finding. The first question is answered in favour of the Department and against the assessee.
7. The second question is whether the notice under S. 21 was validly served in accordance with Rule 77. The notice fixing March 28, 1969 was the first notice issued in this case under S. 21. It was served by affixation. There is no finding or observation in any of the judgements of the authorities below that the other methods prescribed for service were attempted to be followed or that they were not, for any reason, practicable.
8. The consistent view of this Court had been that the procedure prescribed by Rule 77 of the Sales Tax Rules is mandatory and should be complied with. In Messrs. Laxmi Narain Mittal vs. The Commissioner of Sales Tax, a Bench of this Court held that service of notice is a condition precedent for taking proceedings under Section 21.
9. Where the notice has not been validly served on the assessee, proceedings could not be taken against him and the order made under S. 21 is invalid. It was further observed that R. 77 provides for four modes of service of notice on a dealer. These modes are : (1) by giving or tendering a copy of the notice to the dealer; (ii) if the dealer is not easily found, by leaving a copy thereof at his last known place of business or residence, or by giving or tendering it to some adult member of his family; (ii) if the address of such dealer is known to the Sales Tax Officer, by sending a copy thereof to him by registered post; and (iv) if none of the modes aforesaid is practicable; by affixation of a copy thereof in some conspicuous place at his last known place of business or residence.
10. In that case, as in the present case, the process server followed the last mode. He did not antecedently follow any of the other three modes. The Bench observed that this Court has taken the view in some cases that service in accordance with the last mode could be made only after the other three modes have been exhausted without effect. In that case, as in the present case, no attempt was made to serve according to the first three modes. The service was held illegal.
11. In Gopal Das Uttam Chand vs. S.T.O. Dehradun another Division Bench held that Rule 77 of the U.P. Sales Tax Rules provides for four alternative modes of service of notice and the service by affixation provided for by clause (d) can be resorted to only if none of the other modes is practicable. Therefore whenever recourse is desired to be taken to the mode of service mentioned in clause (d), the other modes should be tried first, unless it is shown that none of the other modes is practicable. Whether a particular mode is practicable or not, is a matter to be decided by the Sales Tax Officer and, if the officer after applying his mind to the facts of the case, expresses the opinion that service by other modes is not practicable, he can order the service to be affected through affixation. But he cannot exercise his judgment before the facts are brought to his notice, i.e. he cannot anticipate the facts and form an opinion before hand so as to give instructions to the process-server to effect service under clause (d) without reporting the matter to him. This decision, therefore, holds that service by affixation is invalid if the other modes have not been attempted.
12. In the decision of this Court in Shri Krishna Chandra vs. The State of Uttar Pradesh, Lucknow, the same principles have been followed. It was held that service by affixation without trying the other modes is invalid, being contrary to Rule 77. It was further held that notice under S. 21 was a jurisdictional notice and no reassessment under S. 21 can be made unless a valid notice is issued and served upon the assessee within the prescribed time. In this case, on facts it was found that the teleram served on the assessee was not in respect of proceeding under S. 21 and, therefore, no knowledge of proceedings under S. 21 could be imputed to the assessee by reason of service thereof. After recording this finding, the Bench made a passing observation that mere knowledge of proceedings under S. 21 cannot take the place of a valid notice. This dicta does not apply to a case where the assessee not only has knowledge but he appears and participates in the proceedings.
13. Learned counsel appearing for the Department invited our attention to several decisions, but we are afraid none of them helps him. In Y. N. Narayana Chetty and another vs. I.T.O., Nellore and others, the Supreme Court held that the notice prescribed by S. 34 Income Tax Act, cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the served Income Tax Officer would be justified in taking proceedings against the assessee. This decision, therefore, reinforces the view that not only a valid notice but its valid notice but its valid service, as required by the provisions of law, is a condition precedent.
14. In several decisions, various defects in the notice have been noticed, for instance, in the case of B. K. Gooyee vs. C.I.T. West Bengal, the notice was not sined by the Income Tax Officer. It was held that it was not a valid notice in law. The entire proceedings were held void. In C.I.T. Bombay City-I vs. Ramsukh Motilal, Bombay, the notice required the assessee to file a return within 6 days although the statute gave 30 days notice. The notice was held to be invalid. Similarly, a Bench of this Court in Mir Iqbal Husain vs. The State of U.P., held that the notice requiring the assessee to file a return the next day was void. In Sewlal Daga vs. C.I.T. Calcutta the assessment of an individual was sought to be reopened but the notice issued under S. 34 gave the status of the assessee as Hindu undivided family. The notice was held to be void as it referred to a different assessee. None of the cases cited on behalf of the Department have held that invalidity in the process of a service of the notice was a curable procedural irregularity. In view of the consistent view taken in this Court, it must be held that R. 77 is mandatory and service of notice contrary to these provisions is invalid. Our answer to the second question is in the negative.
15. We now come to the third question. Clearly Rule 77 postulates service of notice with the intervention of the Assessing Authority. But there is nothing in law to prevent an assessee from accepting notice without the intervention of the Assessing Authority. If he does so, the question of compliance with Rule 77 does hardly arise and, so, the proceedings would not be vitiated for such non-compliance, accordingly, where before it is served or validly notice, but before it is served or validly served under Rule 77, the assessee gets knowledge of the proceedings and acting on such knowledge appears and takes steps in aid of the proceedings before the Assessing Authority, the proceedings cannot be said to be illegal or void merely on the ground that the provisions of Rule 77 as regards service of notice were not complied with because compliance with Rule 77 would become meaningless after the assessee had appeared and acted in aid of the proceedings before the Assessing Authority. By to doing, he clearly accepts notice without the intervention of the Assessing Authority under Rule 77. In these circumstances, if an assessee acquires knowledge of the pendency of the proceedings and acting on such knowledge appears and acts in aid of the proceedings before the Assessing Authority, he cannot subsequently be allowed to challenge the proceedings on the ground that the notice was not served or that it was not validly served on him under Rule 77. But it will not estop him from challenging the proceedings on the ground of any other defect in the notice and if the notice is found to be defective otherwise, the proceedings may be void and illegal. None of the cases cited on behalf of the assessee have held that the want of service or invalidity in the service of the notice under Rule 77 would vitiate the proceedings even where the assessee voluntarily appears and acts in aid of the proceedings before the Assessing Authority. It is true that in the case of Krishna Chandra vs. State of Uttar Pradesh, this Court has observed that mere knowledge will not bind an assessee with the notice of the proceedings under S. 21 of the Sales Tax Act, but there is a clear distinction between a case where the assessee has mere knowledge of the proceedings and a case where he has knowledge and acting on such knowledge he appears and acts in aid of the proceedings before the Assessing Authority. Knowledge without anything else may not, but knowledge combined with the overt act of taking steps in aid of the proceedings before the Assessing Authority would be sufficient to bind the assessee with the notice of the proceedings.
16. On the facts of this case, which have been amply stated above, the Assessing Authority issued a notice under S. 21 of the Sales Tax Act to the assessee requiring him to appear before him on March 28, 1969, for completing the assessment. The notice was served by affixation. The assessee actually appeared before the assessing Authority on March 28, 1969 and applied for an adjournment which was granted and the case was adjourned to April 24, 1969. On that day the statement of the assessee was fixed for June 13, 1969. On that day, or even on the adjourned dates, the assessee did not appear. Ultimately the Assessing Authority considered the matter and passed an assessment order dated January 9, 1970. On the findings of fact that the assessee acquired knowledge of the pendency of the proceedings and acting on such knowledge he voluntarily appeared on March 28, 1969 and took steps in aid of the proceedings before the Assessing Authority, and in view of the principle of law stated above, the proceedings cannot be held to be vitiated, merely because, viewed in the context of Rule 77, the service of notice was defective. As such our reply to the question No. 3 will be in the negative, in favour of the Department and against the assessee.
17. In the result, our answers to the questions referred to us are :
(i) in the affirmative in favour of the Department and against the assessee;
(ii) in the negative in favour of the assessee and against the Department;
(iii) in the negative in favour of the Department and against the assessee;
The Department will be entitled to costs which are assessed at Rs. 200/-.