# HOMELY INDUSTRIES v. THE SALES TAX OFFICER, SECTOR V, KANPUR

- **Citation:** [1976] 3 S.C.R. 862
- **Court:** Supreme Court of India
- **Decided:** 1976-03-24
- **Case number:** Civil Appeal Nos. 1176-77 of 1971
- **Bench:** H. R. Khanna, P. K. Goswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/homely-industries-v-the-sales-tax-officer-sector-v-kanpur-6842
- **Pages:** 7

## Headnote

U.P. Sales Tax Act-Secs. 1C(3)-8(1)(2)-Liability of heirs and legal
representatives of a deceased assessee-Whether service of a notice condition
precedent, to recovery proceedings.
Rashidul Hasan was a dealer registered under the U.P. Sales Tax Act.
During the lifetime of Rashidul Hasan, the Sales Tax Officer sept a notice to
him asking him to appear and to produce all ~ooks of account, c~sh mem?s,
bills, receipts, bank pass books, statement of income and expenditure which
he may desire to produce.
He died in December, 1968 leaving behind three
adult sons.
At the time of his death assessment proceedings relating to the
assessment years 196()-61 and
1961-62 were pending before
the Sales T.:X
Officer.
After the death of Rasbidul Hasan. the business was continued by
his sons by forming a partnership. His legal
representatives
obtained
a
number of adjournments in order to make an effective representation. After
granting 6 adjournments the 7th Application for adjournment was rejected by
the Sales Tax Officer and an ex-parte order of assessment was made in April,
1969. The Sales Tax Officer thereafter initiated recovery proceedings in
pursuance of the assessment orders and the demand was soueht to be realised
from the sons of the deceased by coercive measure.
Section 7C(3) of the Act provides that where a person havini: furnished a
return dies and the assessing authority may determine the turnover of such person and assess the tax payable by him on the basis of such determination and,
for this purpose may by notice require from the legal representative of the
deceased person any accounts. documents or other evidence which he might
under the provisions of this Act require from the deceased person.
Section
8 ( 1 ) provides that the tax assessed under the Act shall be paid Within such time
not being less than 15 days from the date of service of the notice of assess·
ment. It further provides that in default of such payment the same may be
recovered as arrears of land revenue. The appellant filed tw·o Writ Petition~
before the High Court of Allahabad challenging the orders and recovery certificates· issued under 'Section 8 of the Act. The High Court rejected the app1ie31tion.
On appeal by certificate under Article 133 (!)(a) of the Constitution, tho
appellant contended :
(1) The assessment orders are invalid as they are made against a dead
person, and that no notice as required by section 7C(3) was served
on the legal representative to produce accounts, documents
and
other evidence.
(2) A proper and valid notice which is a condition precedent for fixing
liability under section 8 has not been served on the legal representatives and therefore the recovery proceedings were illegal.
HELD : (1) The notice was already served on the deceased when he was
alive. It was not necessary to serve the notice on legal representatives again
under Sec. 7C(3). The legal representatives would have been entitled to a
notice to produce documents and evidence if the deceased had not earlier been
served with a similar notice during his life time. The orders of assessment
cannot, therefore, he held to be invalid on account of non:.service of notice for
production of documents Upon the legal representatives in this case.
Besides
the legal representatives were aware of the proceedings and
toOk
several
adjournments and if they did not choose to produce any further evidence it
was entirely their fattlt. [865 E, G, 866 A-BJ
•
\
I
• I
t
'
HOMELY INDUSTRIES v. S.T.o. (Goswami, J.)
863
(2) It is clear that before a certificate proceeding can be instituted under
'Section 8 a notice of demand is condition precedent. There can be no recovery
without service of a demand notice.
It is admitted that such notice has not
heen served on the legal representatives.
That being the position, the recovery
proceedings are not maintainable in law and are invalid and the same along with
'
<:ertificateg are liable to be quashed. [867 C-D]
Sahu Rajeshwar Nath v. Income·Tax Officer l.C.

## Text

A
B
c
D
E
F
G
H
862
HOMELY INDUSTRIES
v.
THE SALES TAX OFFICER, SECTOR V, KANPUR
March 24, 1976
[H. R. KHANNA AND P. K. GOSWAMI, JJ.]
U.P. Sales Tax Act-Secs. 1C(3)-8(1)(2)-Liability of heirs and legal
representatives of a deceased assessee-Whether service of a notice condition
precedent, to recovery proceedings.
Rashidul Hasan was a dealer registered under the U.P. Sales Tax Act.
During the lifetime of Rashidul Hasan, the Sales Tax Officer sept a notice to
him asking him to appear and to produce all ~ooks of account, c~sh mem?s,
bills, receipts, bank pass books, statement of income and expenditure which
he may desire to produce.
He died in December, 1968 leaving behind three
adult sons.
At the time of his death assessment proceedings relating to the
assessment years 196()-61 and
1961-62 were pending before
the Sales T.:X
Officer.
After the death of Rasbidul Hasan. the business was continued by
his sons by forming a partnership. His legal
representatives
obtained
a
number of adjournments in order to make an effective representation. After
granting 6 adjournments the 7th Application for adjournment was rejected by
the Sales Tax Officer and an ex-parte order of assessment was made in April,
1969. The Sales Tax Officer thereafter initiated recovery proceedings in
pursuance of the assessment orders and the demand was soueht to be realised
from the sons of the deceased by coercive measure.
Section 7C(3) of the Act provides that where a person havini: furnished a
return dies and the assessing authority may determine the turnover of such person and assess the tax payable by him on the basis of such determination and,
for this purpose may by notice require from the legal representative of the
deceased person any accounts. documents or other evidence which he might
under the provisions of this Act require from the deceased person.
Section
8 ( 1 ) provides that the tax assessed under the Act shall be paid Within such time
not being less than 15 days from the date of service of the notice of assess·
ment. It further provides that in default of such payment the same may be
recovered as arrears of land revenue. The appellant filed tw·o Writ Petition~
before the High Court of Allahabad challenging the orders and recovery certificates· issued under 'Section 8 of the Act. The High Court rejected the app1ie31tion.
On appeal by certificate under Article 133 (!)(a) of the Constitution, tho
appellant contended :
(1) The assessment orders are invalid as they are made against a dead
person, and that no notice as required by section 7C(3) was served
on the legal representative to produce accounts, documents
and
other evidence.
(2) A proper and valid notice which is a condition precedent for fixing
liability under section 8 has not been served on the legal representatives and therefore the recovery proceedings were illegal.
HELD : (1) The notice was already served on the deceased when he was
alive. It was not necessary to serve the notice on legal representatives again
under Sec. 7C(3). The legal representatives would have been entitled to a
notice to produce documents and evidence if the deceased had not earlier been
served with a similar notice during his life time. The orders of assessment
cannot, therefore, he held to be invalid on account of non:.service of notice for
production of documents Upon the legal representatives in this case.
Besides
the legal representatives were aware of the proceedings and
toOk
several
adjournments and if they did not choose to produce any further evidence it
was entirely their fattlt. [865 E, G, 866 A-BJ
•
\
I
• I
t
'
HOMELY INDUSTRIES v. S.T.o. (Goswami, J.)
863
(2) It is clear that before a certificate proceeding can be instituted under
'Section 8 a notice of demand is condition precedent. There can be no recovery
without service of a demand notice.
It is admitted that such notice has not
heen served on the legal representatives.
That being the position, the recovery
proceedings are not maintainable in law and are invalid and the same along with
'
<:ertificateg are liable to be quashed. [867 C-D]
Sahu Rajeshwar Nath v. Income·Tax Officer l.C. Ward Meerut, 72 I.T.R.
617 S.C. distinguished.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1176-77 of
1971.
From the Judgment and order dated the 17th March, 1970 of the
Allahabad Court in Civil Misc. Writ Nos. 2681-82 of 1968.
S. C. Manchanda. !. D. Jain, Ujjal Singh and Miss Kawaljit Migla11i
for the Appellant.
G. N. Dikshit and 0. P. Rana for the Respondent.
The Judgment of the Court was delivered by
GOSWAMI, J.-These are two appeals on certificates by the High
Court of Allahabad from the judgments and orders of March 17, 1970.
The facts may briefly be stated :
A
B
c
D
The appellant Homely Industries is registered under the Uttar Pradesh Sales Tax Act (briefly the Act). Its sole proprietor was one
Rashidul Hasan.
He died on December 10, 1968, leaving behind
three adult sons, namely, Syed Mohd. Ibrahim, Syed Mohd. Ismail and
Syed Mohd. l!ias.
The business was carried on by Rashidul Hasan
under the name and style of Homely Industries.
At the time oi his
death the assessment proceedings relating to the assessment years 1960E
61 and 1961-62 were pending before the Sales Tax Officer on remand
from the Assistant Commissioner (Judicial), Sales Tax, in pursuance
of his order dated October 26, 1966.
It is said that after the death of Rashidul Hasan the business was
continued by the sons by forming a partnership and Nazir Husain continued as the munim and also appeared before the Sales Tax Officer
in the pending proceedings.
On December 19, 1968, Syed Mohd. Ibrahim, as legal heir and
partner, sent an application through Nazir Husain informing the Sales
Tax Officer, Kanpur, in connection with the two assessment proceedings
that bis father had expired oh December 10, 1968 and that it was not
possible for them to proceed with the case on that day.
It appears that the Sales Tax Officer during the life time of Rashidut
Hasan had addressed a notice to Homely Industries calling upon it to
appear in person or through pleader, or authorised representative on
November 29, 1968, and to produce all books of accounts, cash memos,
bills, receipts, bank pass-books, statement of income and expenditure
and other documents which it may desire to produce in connection with
the assessment. This notice was served on November 20, 1968, on the
son of the proprietor of Homely Industries.
It appears that a number of adjournments were taken after the
death of Hashidul Hasan, sometimes on the application of the munim
F
G
H
A
B
c
D
E
F
G
H
864
SUPREME COURT REPORTS
[1976] 3 S.C.R.
and once even on the application of the son, Syed Mohd. Ismail, to
enable the assessee to make an effective representation. While as many
as six. adjournments were granted on the application of Nazir Husain
and once of the son of the deceased between 19-12-1968 and 26-4-1969,
on the last date a further application by Nazir Husain for adjournment
was rejected by the Sales Tax Officer and an ex-parte order of assessment was made on April 28, 1969.
The Sa;]es Tax Officer initiated recovery proceedings in pursuance
of the assessment orders and the demand was sought to be realised from
the sons of the deceased proprietor by coercive measures. That led to
two writ applications before the High Court of Allahabad challenging
the assessment orders and the recovery certificates issued under section
8 of the Act.
The High Court rejected the applications and granted
certificates un.der Article 133(1)(a) of the Constitution.
It is contended by Mr. Manchanda on behalf of the appellant that
the assessment orders are invalid as they were made against a de,.ad
person.
Secondly, he submits that a proper and valid service of a
demand notice is a condition precedent for fixing liability on the person
from whom the lax is sought to be recovered and in this case there was
no service of notice on the heirs and legal representatives prior to the
attempt of recovery through a coercive process.
With regard to the first submission, the learned counsel draws our
attention to section 7C of the Act which reads as follows :-
"7-C( l). Where a person dies, his executor, administrator
or other legal representative shall be liable to pay out
of the estate of the deceased person; to the extent to
which the estate is capable of meeting the charge, the
tax assessed as payable by such person, or any penalty
which would have been payable by him under this Act,
if he had not died.
(2)
(3)
Where a person dies before the service upon him of
the notice, if any, issued in pursuance of section 7, his
executor, administrator or other legal representative
shall, on the serving of the notice aforesaid, comply
therewith and the Assessing Authority may proceed
to assess the turnover of the deceased person as if
such executor, administrator or other lega~ representative were the assessee.
Where a person dies without having furnished a return
which he has been required to furnish under the provisions of section 7 or having furnished a return which
the Assessing Authority has reason to believe to be
incorrect or incomplete, the Assessing Authority may
determine the turnover of such person and assess the
tax payable by him on the basis of such determination,
and for this purpose may, by notice, require from the
executor, administrator or other legal representative of
the deceased person any accounts, documents, or other
I
r
I
'
HOMELY INDUSTRIES v. S.T.O. (Goswami, !.)
865
evidence which he might nnder the provisions of this
A
Act have required from the deceased person''.
(4) & (5)
x
x
x
x
x
x
Relying upon section 7C(3), it is submitted that no notice as required under that sub-section was served on the legal heirs and representatives to produce accounts, documents and other evidence for
the purpose of determination of the turnover and a~sessment of tax.
Counsel submits that after death of the father no assessment order
could be passed without notice under section 7C(3) upon the heirs and
legal representatives of the deceased assessee.
B
It is true that the Sales Tax Officer did not accept the returns submitted by the dealer. It was, therefore, incumbent under the proviso
to section 7(3) of the Act to give a reasonable opportunity to the
C
dealer for the purpose of proving the correctness and completeness of
the returns already submitted. If the returns were accepted as correct
there was no necessity for giving any opportunity to the dealer as the
case will then be governed by section 7 (2) of the Act. Mr. Manchanda,
therefore, submits that under section 7C(3) read with the proviso to
section 7(3) it was obligatory on the part of the Sales Tax Officer to
give a reasonable opportunity to the legal representatives to produce
D
the documents and accounts before completion of the assessment. Admittedly no notice under section 7C(3) had been served on the legal
representatives.
It is, therefore, submitted that the orders of assessment are invalid.
Although the submission on the first blush is attractive it does not
bear a close scrutiny. This is a case where the assessee had submitted
E
the returns and since the Sales Tax Officer was not prepared to accept
the returns as correct and complete, he served a notice on the sole
proprietor of the assessee, when he was alive, to produce documents
and books of accounts under the proviso to section 7(3). We have
already referred to the said notice which was served on the son of
the proprietor on November 20, 1968, calling upon the dealer to produce the accounts on November 29, 1968. It was, therefore, an obliF
gation on the part of the dealer to produce documents, books of accounts
and other evidence to prove before the Sales Tax Officer that the returns
were correct. This being the factual position about service of notice on
the deceased while he was alive, there was no legal entitlement to any
further notice to the dealer even if the sole proprietor were alive.
Under section 7C(3) the Sales Tax Officer may by notice require
G
from the legal representative of the deceased such accounts, documents
or other evidence as "he might under the provisions of the Act have
required from the deceased person''. The Sales Tax Officer had already
demanded by notice from the deceased while he was alive production
of documents and the books of accounts.
Hence no valid objection
can be taken under section 7C(3) that a further notice for production
of documents and accounts should have been served on the legal repreH
sentatives.
The legal representatives would have been entitled to a
notice to produce documents and evidence if the deceased had not earlier
been s1erved with a similar notice during his life time. Section 7C(3)
B
c
D
. .E
F
G
866
SUPREME COURT REPORTS
[1976] 3 s.c.R.
does not entitle the legal representatives to any notice which the deceased, if alive, would not have been entitled to under the provisions.
of the Act. Since there was no obligation under the Act for service
of a second notice on the dealer, if he were alive, the legal representatives were not entitled to a notice as claimed under section 7C( 3) of
the Act.
The orders of assessment cannot, therefore, be held to be
invalid on account of non-service of notice for production of documents
upon the legal representatives in this case. Besides, we find that the
legal representatives were aware of the proceedings and took several
adjournments and if they did not choose to produce any further evidence
it was entirely their fault and they cannot blame the Officer when the
request for adjournment was not granted after so many requests had
already been acceded to.
We, however, express no opinion on the
merits of their claim.
Mr. Dikshit appearing on behalf of the respondent strenuously contends that the word "may" in section 7C(3) makes it optional for the
Sales Tax Officer to give or not to give notice to the legal represenlal.
tive for production of documents after death of an assessee.
We are
~
unable to accede to this submission.
The scheme of the relevant provisions of the Act is as follows :-
Omitting the non-essentials for the purpose of this case, under subsection ( 1) of section 7 a return is required to be submitted by a dealer
showing his turnover. Under sub-section (2) of section 7, if the Sales
Tax Officer is satisfied that the return submitted by a dealer is correct
and complete he shall assess the tax on the basis of that return. Under
sub-section ( 3) of section 7 read with the proviso, if, according to the
Officer, the return submitted by a dealer is incorrect or incomplete, he
shall make, what i9 called, a best judgment assessment after making
such enquiry as he considers necessary but must, under the proviso
thereto, give a reasonable opportunity to the dealer to prove the correctness and completeness of the return submitted by him.
So far as material for the purpose of this case, section 7C(3),
properly construed, provides, inter alia, that if a person dies after furnishing a return and his return, which was submitted, is not accepted
by the Officer as correct or complete, the obligation to give a reasonable
opportunity to prove the correctness and completeness of the return
under section 7 ( 3) read with the proviso cannot be given a go-by if the
person who submitted the return dies without a notice having been
given for such an opportunity.
The word "may" in section 7C(3)
does not clothe the Sales Tax Officer with arbitrary power of assessment without notice to the legal representative to produce evidence or
documents which, if the dealer were alive, he would have been entitled
to do under section 7(3) read with the proviso. The submission of
Mr. Dikshit is, therefore, devoid of substance.
In the view we have taken that no fresh notice to the legal represenH
tatives was called for prior to the passing of the· assessment orders irr
this case, we are not called upon to decide whether the legal representatives had waived their right to notice as urged in the alternative by
Mr. Dikshit.
j
r
HOMELY INDUSTRIES v. S.T.O. (Goswami, J.)
867
We may now deal with the second submission of Mr. Manchanda
A
that no recovery proceedings could be instituted unless a notice of
demand had been served on the legal representative under section 8 of
the Act. That section reads as under :-
"8 ( 1) The tax assessed under this Act shall be paid in
such manner and in such instalments, if any, and
within such time, not being less than fifteen days from
B
the date of service of the notice of assessment, as may
be specified in the notice. In default of such payment,
the whole of the amount then remaining due shall become recoverable in accordance with sub-section (2).
(2) Any tax or other dues payable to the State Government under this Act shall be recoverable as arrears of
land revenue".
C
It is clear that before a certificate proceeding can be instituted under
sub-section (2) of section 8 a notice of demand under sub-section (1)
thereof is a condition precedent. There can be no recovery without
service of a demand notice. It is admitted that such notice has not been
served on the legal representatives. That being the position the recovery
proceedings are not maintainable in law and are invalid and the same
D
along with the certificates are liable to be quashed.
Mr. Dikshit has drawn our attention to a decision of this Court in
Sahu Rajeshwar Nath v. Income-tax Officer, C-Ward, Meerut, and
Anolher(l) and submitted that this decision is an authority for the proposition that no notice on the legal representative is required under the
law prior to the institution of recovery proceedings by certificate.
E
In that case this Court was considering the li~bility of a· partner of
an unregistered firm which was the assessee and a notice under section
29· of the Income-tax Act, 1922, had been served on the unregistered
firm and all the tax assessed against the firm was sought to be recovered
from the partner in proceedings under section 46(2) of the Income-tax
Act It was contended on behalf of the partner that a fresh notice of
demand upon the partner was necessary under the law and in its absence
the recovery proceedings were invalid.
This Court repelled th.e contention holding that although the unregistered firm was the assessee
the partner was liable under section 25 of the Partnership Act and since
the appellant, therein, conceded that he was a partner of that firm during
the accounting year, no separate notice under section 29 of the Income--
tax Act upon the partner was necessary. It was further held that the
notice contemplated under section 29 of the Income-tax Act, 1922,
was to the assessee or to any other person liable and "any other person
liable under section 29" meant "liable under the Income-tax Act" and
not under any other law such as the Partnership Act.
F
G
That was a case where no question arose about the liability of the
appellant therein under the provisions of the Income-tax Act such as
section 24B of the Income-tax Act, 1922, which is almost identical
H
with section 7C(l) of the Act and that becaus.e of that under section
(I) 72 !TR 617. (JOC)
868
SUPREME COURT REPORTS
[1976] 3 S.C.R.
A
29 of the Income-tax Act a notice of demand was obligatory as a condition precedent to the institution of certificate proceedings for recovery
of the dues as arrears of land revenue. The aforesaid decision of this
Court in Sahu Rajeshwar Nath's case (supra) is, therefore, of no assist-
'
ance to the learned counsel.
In the result the judgments of the High Court are affirmed but the
B
orders with regard to the recovery proceedings, which are invalid, are
set aside. The appeals are partly allowed. There will be, however,
no order as to costs.
We should observe that we express no opinion about the appeals
which are said to be pending before the Assistant Commissioner (Judicial) , Sales Tax.
P.H.P.
Appeals partly allowed.
'
-+