Mandatory pre-assessment notice and hearing requirement makes entry tax demands invalid when computation is completed beforehand.

Prior notice and a real opportunity to object are mandatory before assessment under rule 16(6) and short-levy determination under rule 23(1) of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972. Because the assessable value, tax, penalty, and short levy had already been worked out before the prescribed notices were effectively served, the statutory hearing requirement was not met in substance. The resulting demands under sections 14(3) and 17(1) were therefore invalid for breach of the notice procedure and natural justice. The underlying liability issue was left open, and fresh proceedings could be initiated only after full compliance with the statutory notice and hearing requirements.

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Issues: (i) Whether the demands raised under section 14(3) and section 17(1) of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 were valid when the assessment and short-levy determination were completed before the expiry of the statutory notice periods prescribed by the Entry Tax Rules; (ii) Whether, after quashing the impugned demands, fresh proceedings could be initiated in accordance with law.

Issue (i): Whether the demands raised under section 14(3) and section 17(1) of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 were valid when the assessment and short-levy determination were completed before the expiry of the statutory notice periods prescribed by the Entry Tax Rules.

Analysis: Rule 16(6) required notice in form VI with a minimum period before an adverse assessment and penalty under section 14(3), while rule 23(1) required notice in form IX with time to object and adduce evidence before determination of short levy. The record showed that the computation of assessable value, tax payable, penalty, and short levy had already been completed before the formal demands were issued, so the statutory opportunity of hearing was not afforded in substance. The demands were thus made in breach of the mandatory notice procedure and the principles of natural justice.

Conclusion: The demands under section 14(3) and section 17(1) were invalid and liable to be quashed, in favour of the assessee.

Issue (ii): Whether, after quashing the impugned demands, fresh proceedings could be initiated in accordance with law.

Analysis: Quashing the demands did not finally determine the factual controversy about the correctness of the entry tax liability. The Tribunal therefore left the merits of the alleged evasion and payment dispute open, while directing that any renewed proceedings must comply with the statutory notice requirements and be conducted by another officer.

Conclusion: Fresh proceedings could be initiated after complying with the statutory requirements of notice and hearing.

Final Conclusion: The application succeeded because the impugned demands were made without the mandatory pre-assessment hearing, but the authority was left free to commence afresh proceedings in accordance with law.

Ratio Decidendi: Where the statute and rules prescribe prior notice and an opportunity of objection before assessment or short-levy determination, any demand made after the authority has already completed the computation behind the assessee's back is void for breach of mandatory procedure and natural justice.

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