Best judgment assessment requires strict statutory notice procedure and a meaningful opportunity to be heard before finalisation.

Before resorting to best judgment assessment under the Kerala Value Added Tax regime, the assessing authority must follow the prescribed sequence for defective or incomplete returns, serve proper notices, and give the dealer a meaningful opportunity to produce records, accounts and supporting documents. A composite notice that simultaneously calls for records and asks the dealer to show cause against best judgment assessment, without adequate compliance with the statutory procedure, is inconsistent with the Act, the Rules and fair hearing requirements. On that basis, the assessment orders were quashed and the matter was remitted for fresh assessment after hearing the dealer.

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Issues: Whether the assessment orders were liable to be quashed for non-compliance with the statutory procedure under the Kerala Value Added Tax Act before resorting to best judgment assessment and for denial of a meaningful opportunity of hearing.

Analysis: The assessment was made without following the sequence contemplated by the Act and the Rules for dealing with defective or incomplete returns. Before proceeding to best judgment assessment, the dealer was required to be served with proper notices and afforded a reasonable opportunity to produce records, accounts and supporting documents. A composite notice calling both for production of records and for cause to be shown against best judgment assessment, without adequate compliance with the prescribed procedure, was held to be inconsistent with the statutory scheme and with the requirement of fair hearing.

Conclusion: The assessment orders were quashed and the matter was remitted for fresh assessment after hearing the petitioner.

Final Conclusion: The petitioner succeeded on the procedural challenge, and the assessments were set aside for fresh consideration in accordance with law.

Ratio Decidendi: Before completing a best judgment assessment under the Kerala Value Added Tax regime, the assessing authority must strictly follow the statutory notice procedure and afford a meaningful opportunity to the dealer to produce records and show cause.

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