Natural justice in VAT revision proceedings requires a hearing before penalty consequences are imposed on common facts.

Revised assessment and penalty proceedings under the Tamil Nadu Value Added Tax Act, 2006 cannot be sustained where the revision notice covers both reassessment and penalty on the same facts and no opportunity of hearing is afforded. Section 40(2) requires a hearing before penalty consequences are imposed, and the principles of natural justice apply because such action entails adverse civil consequences. Where assessment and penalty are interconnected, the proceedings cannot be split to isolate the penalty component. The revised assessment orders were therefore unsustainable for want of hearing, and the matter was remitted for fresh disposal after giving the assessee an opportunity of hearing.

---

---

Issues: Whether revised assessment and penalty proceedings under the Tamil Nadu Value Added Tax Act, 2006 could be sustained without affording an opportunity of hearing when the revision notice covered both reassessment and penalty.

Analysis: The notice proposed revision of assessment as well as imposition of penalty on a common set of facts. In such a situation, the proceedings could not be split so as to isolate the penalty component. The mandate of Section 40(2) required an opportunity of hearing before penalty consequences could be visited, and the principles of natural justice were attracted because the order entailed adverse civil consequences. The reasoning was reinforced by the settled principle that, unless excluded by statute, a reasonable opportunity of hearing is ordinarily read into such proceedings, especially where the authority is acting on matters with punitive consequences.

Conclusion: The revised assessment orders were unsustainable for want of hearing, and the matter was remitted for fresh disposal after affording the petitioner an opportunity of hearing.

---