Natural justice in provisional tax assessment: failure to decide extension request and hear the dealer vitiated the adverse order.

Provisional assessment under the West Bengal Value Added Tax Act, 2003 may be vulnerable where the dealer's written request for time to pay tax is not disposed of before an adverse order is passed. The text notes that the return was filed within the extended time, the extension prayer was already before the assessing authority, and no record showed its rejection. Even though provisional assessment is based on past returns or records, the absence of an express hearing provision does not exclude fairness when civil consequences follow. The resulting assessment and penalty orders were therefore set aside for breach of natural justice.

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Issues: Whether the provisional assessment and consequential penalty orders under the West Bengal Value Added Tax Act, 2003 were liable to be set aside for non-disposal of the dealer's prayer for extension of time to pay tax and for want of reasonable opportunity before the adverse assessment.

Analysis: The dealer had filed the return within the extended time directed by the assessing authority and had also made a written prayer for time to pay the tax due, which was placed before the authority before completion of the provisional assessment. There was no record showing rejection of that prayer. The assessing authority nonetheless completed the assessment the next day, taking into account the return for the relevant quarter and earlier returns. Although provisional assessment under section 45(2) is to be made on the basis of past returns or records, the absence of an express hearing provision did not exclude the requirement of fairness where an adverse civil consequence followed. In these circumstances, the failure to decide the extension request and to give the dealer an opportunity before passing the adverse order offended the principles of natural justice.

Conclusion: The provisional assessment order and the appellate confirmation were set aside in favour of the assessee.

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