Finality of exemption order and natural justice barred review and reassessment without notice to the assessee.

A prior adjudication granting the assessee exemption under Notification No. 8/98-C.E. had attained finality because it was never challenged, so later review and consequential assessment steps could not indirectly unsettle that final finding. The later proceedings were also taken without notice to the assessee or proof of service before the revised assessment, denying a reasonable opportunity of hearing. The statutory appellate scheme did not support the manner in which the Commissioner (Appeals) proceeded. On these grounds, the impugned review, appellate and assessment orders were held vitiated for want of jurisdictional competence and breach of natural justice.

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Issues: Whether the impugned review, appellate and consequential assessment orders could stand when the earlier adjudication order in favour of the assessee had attained finality and the assessee was not given notice or hearing.

Analysis: The prior order holding the assessee entitled to exemption under Notification No. 8/98-C.E. had not been challenged and had therefore attained finality. The later review was directed only against the consequential order and not against the original order, yet it indirectly unsettle the earlier final finding. The review was also undertaken without notice to the assessee, although the later orders reversed a benefit already granted. In addition, the statutory scheme contemplated notice to the affected party in appellate proceedings, and the departmental hierarchy did not permit the Commissioner (Appeals) to act in the manner adopted here. The absence of proof of service of notice before the later assessment further showed denial of a reasonable opportunity of hearing.

Conclusion: The impugned orders were vitiated for want of jurisdictional competence and breach of natural justice, and were liable to be quashed in favour of the assessee.

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