Natural justice in best judgment assessment requires sequential notices and a real hearing before finalising the assessment.

Best judgment assessment under the Kerala Value Added Tax Rules, 2005 must follow the prescribed sequence: a prior notice in Form No. 17 calling for accounts and records, consideration of the dealer's response or default, and only then a notice proposing best judgment assessment. Issuing the record-calling notice and the proposal notice on the same day was inconsistent with that sequence and deprived the assessee of an effective opportunity to respond. The assessment was therefore held vitiated for breach of natural justice, and the order was quashed with a fresh assessment directed after giving the petitioner an opportunity of hearing.

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Issues: Whether the assessment order was liable to be quashed for breach of natural justice where the notice calling for records and the notice proposing best judgment assessment were issued on the same day and no effective hearing was afforded.

Analysis: Rule 38 of the Kerala Value Added Tax Rules, 2005 contemplates a sequence in best judgment proceedings: first, a notice in Form No.17 requiring production of accounts and records; thereafter, on consideration of the response or failure to respond, a decision whether to proceed with best judgment assessment under Section 25(1) of the Kerala Value Added Tax Act; and only then a notice of proposal to complete assessment on best judgment basis. The same-day issuance of the Form No.17 notice and the notice under Section 25(1) was inconsistent with that sequence. Since the petitioner was also not heard before the order was passed, the assessment was vitiated by violation of natural justice.

Conclusion: The assessment order was quashed and the matter was remanded for fresh assessment after affording the petitioner an opportunity of hearing.

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