Natural justice bars cancellation of eligibility certificates and consequential assessments without notice or hearing.

Cancellation of final eligibility certificates granting sales tax exemption could not be sustained where the affected petitioners were not given notice or an opportunity of hearing. The adverse action was held to violate the principles of natural justice and fair play, and the cancellation procedure was also inconsistent with the scheme of G.O. Ms. No. 108 read with G.O. Ms. No. 134 governing such cancellations. The consequential assessments under the Andhra Pradesh General Sales Tax Act were therefore unsustainable and were quashed.

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Issues: Whether the cancellation of final eligibility certificates and the consequential assessments under the Andhra Pradesh General Sales Tax Act, 1957 could be sustained despite the absence of notice and hearing to the affected petitioners, and whether the impugned action was in conformity with G.O. Ms. No. 108, Industries and Commerce (IP) Department, dated 20.05.1996 read with G.O. Ms. No. 134, Industries and Commerce (IP) Department, dated 01.07.1996.

Analysis: The eligibility certificates had conferred a beneficial sales tax exemption on the petitioners, and the records showed that they were cancelled without affording the affected parties an opportunity of being heard. The decision adverse to the petitioners' rights was therefore taken in breach of the principles of natural justice and fair play in action. The procedure adopted by the authorities was also found to be inconsistent with the scheme of the Government Orders governing cancellation of the final eligibility certificates.

Conclusion: The cancellation proceedings and the consequential assessments were unsustainable for violation of natural justice and were quashed.

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