Natural justice in tax assessment: cryptic findings and ignored objections led to quashing of notice and order.

A pre-revision notice and assessment order were held unsustainable where the dealer's objections and supporting material were not properly considered. The authority issued a notice calling for purchase and movement details, yet concluded the assessment cryptically, ignored transport documents produced for verification, and proceeded on the basis that no documentary proof of movement existed. The communication relied on against the dealer was not supplied, enquiry was not extended to the alleged selling dealers or recipient parties, and the notice itself indicated a pre-decided demand for tax and interest. The assessment and notice were quashed, with liberty to begin fresh proceedings in accordance with law.

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Issues: Whether the assessment order and pre-revision notice were liable to be quashed for being passed in breach of natural justice and without proper consideration of the dealer's objections and supporting material.

Analysis: The notice required the dealer to furnish details of purchases and movement of goods, but the assessment was concluded in a cryptic manner without dealing with the objections raised. The order recorded that transport documents had been produced for verification, yet it proceeded on the footing that no documentary evidence for movement of goods was available. The communication relied upon against the dealer was not furnished, the enquiry was not extended to the alleged selling dealers or the recipient parties, and the notice itself had already directed payment of tax and interest, indicating a pre-decided conclusion. The opportunity to object was therefore treated as illusory and the assessment as reflecting non-application of mind.

Conclusion: The assessment order and the pre-revision notice were unsustainable and were quashed, with liberty to the authority to initiate fresh proceedings in accordance with law.

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