Natural justice bars cancellation of composition-tax permission where the assessee is denied a reasonable opportunity to respond.

Cancellation of composition-tax permission under the Gujarat Value Added Tax Act was held unsustainable because the assessee was given only one clear working day to reply to the show-cause notice and its request for more time was ignored. The hurried decision, taken without a reasonable opportunity of defence, breached natural justice. As the bank attachment orders rested entirely on that invalid cancellation, they were also quashed. The authority was left free to proceed afresh in accordance with law after granting a personal hearing.

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Issues: Whether the cancellation of permission for composition of tax and the consequential attachment of bank accounts were valid when the assessee was not afforded a reasonable opportunity to respond to the show-cause notice.

Analysis: The permission for composition of tax had been granted under section 14A of the Gujarat Value Added Tax Act, 2003. The assessee was served with the show-cause notice on 9 March 2013, had only one clear working day to respond, and its request for more time was ignored. The matter involved a serious proposed tax demand and required proper examination of the factual and legal issues before a final decision could be taken. The hurried completion of the exercise deprived the assessee of a fair opportunity to place its defence on record, amounting to a breach of the principles of natural justice. The bank attachment orders were founded solely on the cancellation order.

Conclusion: The cancellation of permission for composition of tax was unsustainable and was set aside. The consequential bank attachment orders were also quashed.

Final Conclusion: The assessee obtained relief against both the base cancellation order and the consequential attachment orders, while the authority was left free to proceed afresh in accordance with law after granting a personal hearing.

Ratio Decidendi: A statutory power affecting tax liability cannot be exercised on an unduly truncated notice period where the assessee is denied a reasonable opportunity of defence; a consequential order founded entirely on such invalid base action must also fall.

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