Natural justice in escaped turnover assessment requires verification of seized records before adverse findings on suppression are made.

Assessment of escaped turnover under the Kerala Value Added Tax Act was held unsustainable where the assessee sought verification of seized records together with the books of account to explain the alleged suppression, but the request was not considered. The assessment proceeded on the mistaken footing that the penalty proceedings had attained finality, even though escaped turnover assessment and penalty proceedings are distinct. Denial of an opportunity to verify and meet the material relied upon against the assessee was treated as a violation of natural justice. The assessment order was set aside and the matter remanded for fresh consideration after permitting verification of the seized records.

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Issues: Whether the assessment order under Section 25(1) of the Kerala Value Added Tax Act, 2003 was vitiated for want of an opportunity to verify the seized records along with the books of account before the escaped turnover was determined.

Analysis: The petitioner had specifically sought verification of the seized documents along with the books of account so as to explain the alleged suppression of turnover. The assessment order did not answer that request and proceeded on the footing that the penalty proceedings had attained finality. The assessment proceedings for escaped turnover and the penalty proceedings were distinct, and the assessee was entitled to a fair opportunity to meet the material relied upon against him. Denial of such an opportunity amounted to violation of the principles of natural justice.

Conclusion: The assessment order was set aside and the matter was remanded to the assessing authority for reconsideration after permitting verification of the seized records and passing fresh orders in accordance with law.

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