Best judgment assessment requires hearing and cross-examination before adverse material is used in VAT proceedings.

In best judgment assessment proceedings under the Tamil Nadu Value Added Tax Act, 2006, the assessing authority must afford a hearing and allow the dealer to test adverse material relied on for the assessment. Where the authority relied on information from the departmental website and other sources, and the dealer sought copies of invoices and cross-examination of persons whose statements or materials were used, Section 81 was treated as requiring compliance before a fresh merits-based order could be made. The assessment was therefore set aside and the matter remanded for reconsideration after granting hearing and following Section 81 procedure.

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Issues: Whether, in proceedings for best judgment assessment under the Tamil Nadu Value Added Tax Act, 2006, the assessing authority was bound to afford an opportunity of hearing and permit cross-examination of persons relied on for making the assessment.

Analysis: The assessment was made under Section 22(4) of the Tamil Nadu Value Added Tax Act, 2006, after the authority relied on material gathered from the departmental website and other sources. Section 81 of the Act confers power to summon witnesses and compel production of documents, and also enables the dealer to test adverse material through cross-examination. Since the dealer specifically sought copies of the invoices and an opportunity to cross-examine the persons whose statements or materials were relied upon, the assessment could not be sustained without following the procedure contemplated by Section 81. The requirement of hearing was treated as mandatory before passing a fresh order on merits.

Conclusion: The issue was answered in favour of the petitioner. The impugned assessment was set aside and the matter was remanded for fresh consideration after compliance with Section 81 and grant of an opportunity of hearing.

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