Natural justice in tax assessments requires a personal hearing when voluminous records and adverse consequences are in issue.

Where an assessee facing adverse tax assessment specifically requests a personal hearing and the dispute depends on scrutiny of voluminous documents, issuance of notice or an opportunity to file objections does not by itself satisfy fair procedure. The High Court treated natural justice as applicable under the statutory scheme, held that the assessing authority should have granted a personal hearing and examined the documents before finalising the assessments, and found the assessments unsustainable for breach of natural justice. The matters were remanded for fresh consideration with a proper hearing and an opportunity to produce documents.

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Issues: Whether the assessment orders could be sustained when the assessee had specifically sought personal hearing and produced only sample documents because the records were voluminous, and whether the statutory notice procedure could substitute for a personal hearing.

Analysis: The dispute turned on the interaction between the deemed assessment and revision provisions under the Tamil Nadu Value Added Tax Act and the requirement of fair hearing when adverse civil consequences follow. The Court held that where the assessee expressly sought a personal hearing and claimed exemption on the basis of large volumes of documentary material, mere issuance of notice or opportunity to file objections was not enough. Relying on the statutory scheme and the settled principle that natural justice is generally read into provisions causing adverse consequences unless expressly excluded, the Court held that the assessing authority ought to have granted a personal hearing and considered the documents before finalising the assessments. The Court also noted that the saving provision preserved the applicability of the relevant administrative instructions and that the earlier decisions on sales tax assessments supported the need for a personal hearing in such circumstances.

Conclusion: The assessment orders were vitiated for breach of natural justice and were set aside; the matters were remanded for fresh consideration after affording personal hearing and an opportunity to produce documents.

Final Conclusion: The writ petitions challenging the assessment orders succeeded, the connected proceedings became unnecessary in view of that relief, and the revenue was permitted to pursue the matter afresh in accordance with law after granting a proper hearing.

Ratio Decidendi: Where an assessee facing adverse tax assessment specifically requests personal hearing and the dispute depends on scrutiny of voluminous documentary evidence, notice to show cause does not by itself satisfy the requirement of fair procedure and the assessment cannot be sustained without affording such hearing.

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