Natural justice and cross-examination requirements can invalidate sales tax assessments based on external reports and untested material.

Alternative statutory remedy does not bar writ jurisdiction where the challenge is founded on breach of natural justice or lack of jurisdiction, and the writ was therefore maintainable. In sales tax assessment, liability must be proved on legally admissible material showing actual taxable sales; reliance on external reports, bank entries and income-tax material without independent scrutiny, coupled with denial of effective cross-examination of relied-upon witnesses, rendered the assessment orders unsustainable and liable to be quashed. A limitation challenge to the block assessment also failed, because the block assessment provision covered the relevant evasion period and the extending notification was found to be within time.

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Issues: (i) Whether the writ petition was maintainable despite the availability of an alternative statutory remedy, in view of alleged violation of natural justice and absence of jurisdiction. (ii) Whether the impugned assessment orders could be sustained when they were founded on external reports and income-tax material without independent scrutiny by the assessing authority and without affording effective cross-examination. (iii) Whether the challenge based on limitation could succeed against an assessment made under the block assessment provision.

Issue (i): Whether the writ petition was maintainable despite the availability of an alternative statutory remedy, in view of alleged violation of natural justice and absence of jurisdiction.

Analysis: The availability of an alternative remedy does not create an absolute bar to writ jurisdiction. Where the proceedings are vitiated by breach of natural justice or are wholly without jurisdiction, the High Court may interfere under Article 226 of the Constitution of India. On the facts, the grievance was not merely factual disagreement but a challenge to the fairness and legality of the process adopted by the authority.

Conclusion: The writ petition was maintainable.

Issue (ii): Whether the impugned assessment orders could be sustained when they were founded on external reports and income-tax material without independent scrutiny by the assessing authority and without affording effective cross-examination.

Analysis: In sales tax matters, liability must rest on material showing actual taxable sales, and the burden lies on the Revenue to establish the evasion. The authority relied substantially on the Anti Evasion Bureau report, bank entries, income-tax assessment material, and statements of transport-related persons, but did not independently assess the material or properly test it through cross-examination. Since the petitioner specifically disputed the transactions and sought cross-examination of the witnesses whose statements were used against it, denial of that opportunity and absence of independent fact-finding rendered the orders legally infirm and perverse.

Conclusion: The impugned assessment orders were unsustainable and liable to be quashed.

Issue (iii): Whether the challenge based on limitation could succeed against an assessment made under the block assessment provision.

Analysis: The block assessment provision expressly contemplates assessment of tax evasion relating to the block period, irrespective of the year to which the tax relates, and the court found that the Government notification extending the period was within time because the limitation had not expired. The plea that the assessment was barred by limitation therefore could not be accepted.

Conclusion: The limitation challenge failed.

Final Conclusion: The impugned orders were quashed on the ground of illegality in the assessment process, while the Revenue was left free to proceed afresh in accordance with law after following the proper procedure.

Ratio Decidendi: In sales tax proceedings, the authority must independently establish taxable sales on legally admissible material and observe natural justice, including a fair opportunity of cross-examination where relied-upon statements are used; otherwise the assessment is liable to be struck down despite the availability of an alternative remedy.

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