Fair procedure in assessment requires cross-examination before relying on undisclosed third-party material for an adverse finding.

Adverse assessment cannot rest on third-party inquiries or statements collected behind the dealer's back unless the assessing authority proves their correctness and the dealer is given a fair opportunity to test that material by cross-examination. Where the dealer disputes undisclosed material and seeks cross-examination, denial of that opportunity breaches fair procedure and the resulting adverse inference cannot be sustained. The dealer may still be required to support claims of inter-State dispatch and commission-agent sale, but only after a lawful hearing. The assessment orders were set aside and the matter was remanded for fresh assessment on merits after compliance with fair procedure.

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Issues: Whether the assessment could be sustained on the basis of inquiries and statements collected behind the dealer's back without affording an opportunity of cross-examination, and whether the matter required remand for fresh assessment.

Analysis: When the Revenue relies upon inquiries or statements gathered from third parties behind the dealer's back, the correctness of such material must be established by the assessing authority. If the dealer disputes that material and seeks cross-examination of the persons concerned, denial of that opportunity offends fair procedure and the adverse inference drawn on the basis of such undisclosed material cannot be sustained. The dealer may still be required to adduce evidence in support of the claim of inter-State dispatch and commission-agent sale, but only in accordance with law and after a fair opportunity of hearing.

Conclusion: The assessment orders could not be sustained on the existing record; the orders below were set aside and the matter was remanded for fresh assessment after affording opportunity of cross-examination and further evidence as permitted by law.

Final Conclusion: The revisions succeeded to the extent that the impugned assessment orders were annulled and the dispute was sent back for a fresh decision on merits after compliance with fair procedure.

Ratio Decidendi: Material collected behind the notice of the assessee cannot be relied upon to sustain an adverse assessment unless the assessee is given a fair opportunity to test that material by cross-examination and the Revenue proves its correctness.

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