Assessment must be finalised before differential tax recovery; direct demand notices without opportunity to object breach natural justice.

Demand notices for alleged differential tax were invalid where they were issued on the basis of monthly returns without first finalising assessment under the prescribed statutory procedure. A direct demand after the assessment year ended, without an assessment order or an opportunity to object, breached natural justice. The proper course was to complete the assessment in accordance with law and then recover only the tax lawfully found due. The notices were set aside and the authority was directed to finalise assessment before taking further recovery steps.

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Issues: Whether the demand notices calling upon the assessee to pay the alleged differential tax without first finalising the assessment were valid in law.

Analysis: The notices were issued on the basis of monthly returns and demanded differential tax after the assessment year had already ended, without completing the assessment in the manner prescribed by law. The absence of an assessment order and the immediate demand for payment without affording an opportunity to object amounted to a violation of natural justice. The proper course was to finalise the assessment under the statutory procedure and then proceed to recover any tax lawfully found due.

Conclusion: The demand notices were set aside and the respondent was directed to finalise the assessment in accordance with law before taking further recovery steps.

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