Natural justice in best judgment assessment permits use of third-party information if the assessee gets the substance and a fair chance to rebut it.

In a best judgment sales tax assessment based on third-party account extracts, natural justice is satisfied where the assessee is supplied the substance of the adverse material and given a fair chance to explain or rebut it. The authority need not, as a matter of right, produce every informant or allow confrontation with third parties in every case. Here, the assessee was informed of the relevant extracts more than once and had the opportunity to challenge them but did not take effective steps to do so. Disclosure of the gist of the private information and an opportunity to meet it were therefore sufficient compliance with natural justice.

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Issues: Whether, in a sales tax assessment based on information obtained from the books of account of third parties, there was sufficient compliance with natural justice when the assessee was supplied the relevant extracts but was not afforded an opportunity to confront those third parties.

Analysis: The material used by the assessing authority consisted of extracts from the books of the third-party retailers and the assessee was informed of those extracts on more than one occasion. The assessee had an opportunity to explain or disprove the entries, and the record showed that he did not take any effective step to challenge them during the assessment proceedings. The legal requirement is that the gist of private information used against an assessee must be disclosed so that he can meet it fairly, but the authority is not bound, as a matter of right, to produce every informant or to permit confrontation in every case. On the facts, disclosure of the adverse material and opportunity to rebut it were sufficient.

Conclusion: The requirement of natural justice was sufficiently complied with, and the Tribunal was correct in so holding.

Ratio Decidendi: In a best judgment assessment, use of private information is permissible if the substance of the adverse material is disclosed to the assessee and a fair opportunity to meet it is given; confrontation of the source is not an absolute right.

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