Summary
A pipe manufacturer challenged a 2018 attachment notice under the Revenue Recovery Act for tax arrears of about Rs. 5.6 crores, contending that the assessment orders for 2009-10 and 2010-11 had never been served on it as prescribed by Rule 64 of the Telangana VAT Rules. The High Court upheld the earlier assessments but set aside the attachment for want of proof of service of the later orders. The Supreme Court allowed the Revenue's appeal: the assessee had neither objected nor deposited as directed in its own earlier writ petition, did not deny the finality of these very assessments when pleaded in the Revenue's 2011 writ petition against its bank, and never alleged non-service in its representations; a party with knowledge of an order cannot later complain about the mode of service.
Issues
- Whether an assessee who did not deny the finality of assessment orders pleaded against it in earlier writ proceedings and never alleged non-service in its representations can later resist recovery proceedings on the ground that the assessment orders were not served in the manner prescribed by Rule 64 of the Telangana VAT Rules, 2005.
Provisions considered
- Rule 64, Telangana VAT Rules, 2005Prescribes the modes of service of notices and orders on a company; while an adverse appealable order must ordinarily be served, the assessee's knowledge of and acquiescence in the assessment orders made its belated complaint about service untenable. (¶¶ 9, 11, 14, 15, 19)
- Sections 25, 26 and 27, Telangana State Value Added Tax Act, 2005Tax arrears have a first charge and priority over bank dues, which the Revenue asserted in its writ petition against the bank's auction notification, pleading the assessee's crystallised liability; Section 27 enables recovery under the Revenue Recovery Act by attachment of the assessee's property. (¶¶ 2, 7, 16, 18)
- Forms IV and V notices, Revenue Recovery Act, 1864Demand and attachment notices issued in 2011, 2012, 2015 and 2018 for the arrears; the 2018 attachment notice set aside by the High Court is revived. (¶¶ 6, 7, 12, 20)
Held
- After its own writ petition was disposed of in 2010 permitting objections on deposit of Rs. 20 lakhs, the assessee neither objected nor deposited; as a regular dealer filing returns it made no effort to learn the fate of its later assessments; and when impleaded in the Revenue's 2011 writ petition, which pleaded that the assessments had become final and the dues of Rs. 5,59,58,758 had priority over the bank, it did not deny those averments or plead non-service, a telling aspect of deliberate silence. (¶¶ 16, 18)
- Its representations after the 2018 attachment did not allege non-service but only that the orders were untraceable in its own records; following Amina Bi Kaskar, where a party had knowledge of the order, irregularity in the manner of service is of no consequence, and following Budhia Swain an objection to the manner rather than the fact of service is at best an irregularity; the High Court erred in treating the different subject matter of the Revenue's writ petition as excusing the assessee's silence when its entire premise was the assessee's tax liability. (¶¶ 17, 19)
Result
Appeal allowed; Telangana High Court judgment dated 28.09.2021 set aside; attachment notice in Form V dated 20.02.2018 under the Revenue Recovery Act revived and the Revenue left free to recover the dues as per that notice; no order as to costs.