Tax liability must be determined first before registration or notices issue, with a fair hearing and disclosed basis for action.

A taxing authority must first determine, on a reasoned basis, whether the applicants were dealers liable to tax before issuing registration orders or consequential notices under the Bengal Finance (Sales Tax) Act, 1941. Where the assessee disputes taxability and seeks disclosure of the material relied on, the authority must furnish the factual basis of the proposed action and give an effective opportunity of hearing. On the facts described, registration, notices and related proceedings were set aside and the matter was remitted for a fresh decision on liability in accordance with law.

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Issues: Whether the registration order, notices and consequential proceedings under the Bengal Finance (Sales Tax) Act, 1941 could stand without a prior determination of the applicants' status as dealer and their liability to tax, after furnishing the basis of the proposed action and giving an effective opportunity of hearing.

Analysis: The proceedings were initiated on the footing of alleged casual sales and amended dealer liability, but the applicants consistently disputed taxability, requested particulars of the information relied upon, and maintained that the registration application was made under protest. The authority nevertheless proceeded to hold the applicants liable for registration and issued further notices without first deciding the foundational question whether the applicants were dealers liable under the Act and without disclosing the factual basis for the proposed turnover determinations. In such circumstances, the impugned action could not be sustained. The proper course was to set aside the registration, notices and consequential steps and to direct a fresh decision after hearing the applicants and determining liability in accordance with law.

Conclusion: The impugned order, notices, registration and consequential proceedings were set aside, and the matter was remitted to the Commercial Tax Officer to decide afresh the applicants' liability to tax after hearing them.

Ratio Decidendi: A taxing authority cannot impose registration or proceed with assessment-related notices without first determining the foundational question of tax liability on a reasoned basis after affording the assessee an effective opportunity of hearing.

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