Mandatory pre-assessment hearing under sales tax law is essential; omission invalidates assessment and bars reliance on untested registration statements.

A mandatory opportunity of hearing under section 12(5) of the Orissa Sales Tax Act had to be given before best judgment assessment for the relevant quarters; its omission rendered the assessments invalid because it caused serious prejudice and was not a mere irregularity. In the absence of that hearing, the assessee's registration application and statements in it could not be treated as conclusive evidence to establish liability for those quarters, since they did not replace the statutory procedure or allow the assessee to challenge their accuracy. No legal evidence showed any waiver of the prescribed procedure, and a general arrangement could not displace the individual statutory right to hearing.

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Issues: (i) Whether the assessments for the three quarters were legal and valid in the absence of an opportunity of being heard under section 12(5) of the Orissa Sales Tax Act, 1947; (ii) Whether, in the absence of such opportunity, the assessee's application for registration or the statements therein could be used as legal evidence against him to establish liability for those quarters; (iii) Whether there had been any agreement to waive the procedure prescribed by the Act and, if so, its effect.

Issue (i): Whether the assessments for the three quarters were legal and valid in the absence of an opportunity of being heard under section 12(5) of the Orissa Sales Tax Act, 1947.

Analysis: Section 12(5) was treated as mandatory. The record showed that no notice or opportunity of hearing had been given before the assessments were made. The assessee was thereby deprived of the chance to establish that he had commenced business only on 17 April 1948 and was not liable for the earlier quarters. The absence of the statutory hearing caused serious prejudice and could not be treated as a mere irregularity.

Conclusion: The assessments were not legal and valid in the absence of an opportunity under section 12(5).

Issue (ii): Whether, in the absence of such opportunity, the assessee's application for registration or the statements therein could be used as legal evidence against him to establish liability for those quarters.

Analysis: The assessment order did not rest on any material tested before the assessee. In the circumstances, the registration application and the statements contained in it could not be treated as conclusive evidence against him without affording him a chance to show that the statements were inaccurate. The material could not replace the statutory procedure or cure the denial of hearing.

Conclusion: The application for registration and the statements therein could not be used as legal evidence against the assessee for those quarters.

Issue (iii): Whether there had been any agreement to waive the procedure prescribed by the Act and, if so, its effect.

Analysis: No legal evidence established that the assessee was party to any agreement waiving the statutory procedure. Even if such a general arrangement had existed with dealers as a class, it could not override the individual assessee's statutory right to the hearing mandated by the Act without proof of his participation and lawful waiver.

Conclusion: There was no agreement to waive the procedure of the Act.

Final Conclusion: The reference was answered in favour of the assessee, with the assessments declared invalid for want of the mandatory hearing and the alleged waiver rejected.

Ratio Decidendi: Where a taxing statute makes an opportunity of being heard mandatory before a best judgment assessment on a person said to have failed to register, omission to give that hearing renders the assessment invalid, and untested statements from a registration application cannot be used to supply the missing procedural safeguard.

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