Mandatory notice and hearing under sales tax law required before assessment; ex parte liability enhancement was invalid.

A show-cause communication that effectively fixed sales tax liability at a higher rate and required immediate payment could not substitute for the statutory assessment procedure. Under section 11(2) of the Punjab General Sales Tax Act, 1948, the assessing authority had to serve notice and afford the dealer an opportunity to produce evidence before framing the assessment. Because that mandatory notice-and-hearing requirement was not followed, the assessment action in paragraph 3 of the notice was invalid and liable to be quashed in favour of the assessee.

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Issues: Whether the assessing authority could complete the assessment and enhance the sales tax liability by a notice that, in substance, amounted to an ex parte assessment without complying with the statutory requirement of notice and hearing under section 11(2) of the Punjab General Sales Tax Act, 1948.

Analysis: The impugned communication, though styled as a show-cause notice, in effect determined the tax liability at the higher rate and directed immediate payment of the balance, leaving nothing further to be done. In such circumstances, the statutory procedure under section 11(2) required the assessing authority, before framing the assessment, to serve notice on the dealer and afford an to produce evidence in support of the returns. As no such procedure was followed, the assessment action was contrary to the mandatory requirement of the provision.

Conclusion: The assessment action embodied in paragraph 3 of the notice was invalid for non-compliance with section 11(2) and was liable to be quashed in favour of the assessee.

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