Mandatory personal hearing before luxury tax assessment and penalty; proceedings set aside for breach of natural justice.

The assessment and penalty proceedings under the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act were vitiated because the proprietor was not given the personal hearing required before tax was determined and penalty imposed. The objections had sought documents and cross-examination, and the authority proceeded to issue a tax demand and penalty without affording the statutory hearing. Compliance with the hearing requirement and natural justice was mandatory, so the impugned proceedings were set aside and the matter was remitted for fresh consideration after personal hearing. The request for cross-examination was not finally decided and was left to the authority's discretion on remand.

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Issues: Whether the assessment and penalty orders were vitiated for want of a personal hearing under Section 6(5) of the Tamil Nadu Tax on Luxuries in Hotels and Lodging Houses Act, 1981.

Analysis: The provision required the assessing authority, before determining tax payable and imposing penalty, to give the proprietor an opportunity of being heard. The petitioners had specifically sought documents and cross-examination in their objections, and the proceedings culminated in a tax demand and penalty without granting a personal hearing. In such circumstances, compliance with the statutory hearing requirement and the principles of natural justice was mandatory. The plea for cross-examination was not finally directed by the Court and was left to the discretion of the authority on remand.

Conclusion: The impugned proceedings were set aside for breach of the hearing requirement and the matters were remitted for fresh consideration after affording personal hearing.

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