Procedural fairness in VAT assessment: inadequate notice and undisclosed material led to setting aside of an ex parte order.

Rule 31 of the Madhya Pradesh VAT Rules, 2006 requires compliance notice to be served ordinarily at least 30 days before the hearing, and an assessment based on undisclosed internet and Google material without confronting the assessee denies a proper opportunity of hearing. Because the notices were served only a few days before the fixed dates and the taxpayer was not allowed to explain its stand, the ex parte assessment lacked procedural fairness. The assessment was set aside and the matter remitted for a fresh hearing and fresh order in accordance with law.

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Issues: Whether the ex parte assessment order was liable to be set aside for want of adequate notice and opportunity of hearing, and whether the matter should be remitted for fresh assessment.

Analysis: Rule 31 of the Madhya Pradesh VAT Rules, 2006 contemplates that the notice for compliance should ordinarily be served not less than 30 days from the date of service. The notices issued in the present case were served only a few days before the dates fixed for hearing, and the authority also relied upon information collected from internet and Google search without putting that material to the assessee. In these circumstances, the assessee was denied a proper opportunity to explain its stand, including its contention that it was only collecting rent for the land and not advertisement tax. The assessment, therefore, lacked adequate procedural fairness.

Conclusion: The ex parte assessment order was set aside and the matter was remitted to the assessing authority for granting a fresh opportunity of hearing and for passing a fresh order in accordance with law.

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