Natural justice in suo motu revision: assessee must be heard before tax liability is altered on disputed facts

Suo motu revisional power cannot be used to reverse an appellate order without first giving the assessee a meaningful opportunity to be heard on the factual basis of taxability. Where liability depended on whether the purchase was of an immovable building or only detachable building components, the revisional authority was required to consider the assessee's contention and allow it to place supporting material. The revisional order was therefore vitiated for breach of natural justice and was quashed, with the matter remitted for fresh consideration after hearing the assessee on the exemption and second-sale issues.

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Issues: Whether the revisional order passed under section 34 of the Tamil Nadu General Sales Tax Act, 1959 was vitiated for want of an opportunity of hearing to the assessee.

Analysis: The revisional authority interfered with the appellate order without first examining the assessee's contention that what had been purchased was the components of the building and not the building as immovable property. In a case turning on whether the first transaction related to the building itself or to detachable components, the assessee had to be given a fair opportunity to place material on the true nature of the purchase. The exercise of suo motu revisional power could not be used to reverse the appellate order without affording such hearing, particularly where the factual basis of taxability itself was in dispute.

Conclusion: The revisional order was vitiated and liable to be quashed for breach of natural justice, and the matter had to be remitted for fresh consideration after hearing the assessee.

Final Conclusion: The appeal succeeded to the extent that the revisional order was set aside and the case was sent back for fresh hearing on the factual issue bearing on exemption and second-sale treatment.

Ratio Decidendi: A revisional authority exercising suo motu power must afford the assessee a meaningful opportunity to contest the factual basis on which tax liability is sought to be revived or altered.

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