Fair hearing in tax proceedings requires disclosure of relied-upon documents and prior decision of jurisdictional exemption issues.

Relied-upon documents must be furnished before an effective reply to a show cause notice is required, because denial of the material proposed to be used against a person prejudices the defence and offends fair hearing. The Department was therefore required to supply the requested documents. Where jurisdiction depends on a foundational fact or exemption claim, that jurisdictional issue must be decided first; since prior decisions had treated the assessee's units as mines, the Department was required to determine the preliminary exemption and jurisdiction question before proceeding on the merits.

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Issues: (i) Whether the respondent was bound to furnish the documents sought by the assessee before requiring a reply to the show cause notice. (ii) Whether the question whether the assessee's units were mines entitled to exemption and the Department's jurisdiction had to be decided as a preliminary issue.

Issue (i): Whether the respondent was bound to furnish the documents sought by the assessee before requiring a reply to the show cause notice.

Analysis: The assessee had sought copies of the relied upon documents to enable an effective reply to the show cause notice. The Court held that a fair enquiry cannot be completed unless the person facing the proceedings is furnished with the relevant material proposed to be used against him. Denial of such material would prejudice the defence and offend the requirement of fair hearing.

Conclusion: The respondent was directed to furnish the documents sought by the assessee.

Issue (ii): Whether the question whether the assessee's units were mines entitled to exemption and the Department's jurisdiction had to be decided as a preliminary issue.

Analysis: The assessee raised a jurisdictional objection based on exemption notifications and the plea that its units were mines within the meaning of the Mines Act. The Court held that where jurisdiction depends on a foundational fact, that issue must be decided first. Since prior judicial decisions had recognised the assessee's units as mines, the Department was required to decide the preliminary issue before proceeding further on the merits.

Conclusion: The Department was directed to decide the preliminary jurisdictional and exemption issue first.

Final Conclusion: The impugned communication was set aside in part, and the assessee obtained relief on both disclosure of documents and prior determination of the jurisdictional exemption question before adjudication could continue.

Ratio Decidendi: In tax adjudication, relied upon documents must be supplied to enable an effective defence, and where jurisdiction turns on an antecedent fact or exemption claim, that jurisdictional issue must be determined as a preliminary issue before proceeding to the merits.

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