Penalty and assessment set aside for lack of notice and personal hearing under the Tamil Nadu Value Added Tax Act.

A penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 could not be sustained because the show cause notice did not propose the 150% penalty, and an assessee cannot be visited with an adverse consequence without specific notice. The assessment order was also set aside because Section 22(4) requires a personal hearing in revision of assessment matters, and that opportunity was not given, amounting to a breach of natural justice. The Madras High Court quashed the assessment order and remanded the matter for fresh consideration after proper notice and hearing.

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Issues: (i) Whether penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained when the show cause notice did not propose such penalty; (ii) Whether the assessment order was liable to be interfered with for want of personal hearing as required under Section 22(4) of the Tamil Nadu Value Added Tax Act, 2006.

Issue (i): Whether penalty under Section 27(3) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained when the show cause notice did not propose such penalty.

Analysis: The notice did not contain any proposal to impose penalty at 150% under Section 27(3). A penalty order cannot be sustained when the assessee was not put on notice of that proposed consequence.

Conclusion: The issue was answered in favour of the assessee.

Issue (ii): Whether the assessment order was liable to be interfered with for want of personal hearing as required under Section 22(4) of the Tamil Nadu Value Added Tax Act, 2006.

Analysis: Section 22(4) mandates a personal hearing, particularly in revision of assessment matters. The requirement was not followed before passing the impugned order, resulting in violation of natural justice.

Conclusion: The issue was answered in favour of the assessee.

Final Conclusion: The assessment order was quashed and the matter was sent back for fresh consideration after issuance of a proper notice and grant of personal hearing.

Ratio Decidendi: A penalty or adverse assessment cannot be sustained unless the assessee is specifically put on notice of the proposed action and given the statutory opportunity of personal hearing where required.

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