JUDICIARY ON GST AUDIT

JUDICIARY ON GST AUDIT

 

Srikanth Trading Company Vs. State of Andhra Pradesh [1998] 109 STC 0590

Petitioner is a dealer registered under the Andhra Pradesh General Sales Tax Act, 1957. It challenges the validity of the order of the Sales Tax Appellate Tribunal in as illegal and arbitrary. Question that arises for consideration is whether an auditor is an agent within the meaning of clause (a) of rule 58 of the Andhra Pradesh General Sales Tax Rules, 1957.

Andhra Pradesh High Court held that”8. A plain reading of the rule, extracted above, shows that service on the dealer of any notice, summons, order or proceedings under the Act or under the Rules may be effected in any one of the ways mentioned in clauses (a) to (d). Clause (a) speaks of giving or tendering it to such dealer, or his manager or agent. What is contended here is that no notice was tendered to the dealer or to the manager, it was tendered to the auditor, who does not come either within the meaning of manager or agent. The learned Special Government Pleader, however, relies on section 35(a) of the Act to show that the auditor falls within the meaning of agent. Section 35 deals with appearance before any authority in proceedings. It is in the following terms:

               “35. Appearance before any authority in proceedings.-Any person who is entitled to appear before any authority other than the Special Appellate Tribunal in connection with any proceedings under this Act, may be represented before such authority                (a) by his relative or a person regularly employed by him, if such relative or person is duly authorized by him in writing in this behalf; or

               (b) by a legal practitioner; or

               (c) subject to such conditions as may be laid down by the rules in that regard by a chartered accountant within the meaning of the Chartered Accountants Act, 1949 or by a person who was enrolled as a sales tax practitioner by such authority on payment of such fees and possessing such qualifications as may be prescribed if such accountant or sales tax practitioner is duly authorized in writing in this behalf.”

               It must be pointed out here that service of notice on persons as contemplated under rule 58 is entirely different from appearance of the persons under section 35 of the Act. Merely because under section 35 the chartered accountant is entitled to appear in the proceedings before the authorities under the Act, it cannot be held that the chartered accountant is an agent for purposes of receiving pre-assessment notice. Receiving of notice during the pendency of any proceedings where chartered accountant is appearing cannot be equated with receiving of pre assessment notice for and on behalf of a dealer. There is nothing on record to show that the auditor appeared before the Commercial Tax Officer pursuant to the notice in the assessment proceedings. In the absence of such material, in our view, service of show cause notice on the auditor who happened to appear subsequently in penalty proceedings cannot be taken as sufficient notice. In this view of the matter, the impugned order of assessment is set aside. The assessing authority is at liberty to issue fresh show cause notice and proceed with the assessment, in accordance with law.”

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