Natural justice in tax assessment requires effective hearing and consideration of objections before penalty orders are finalised.

The assessment and penalty order under the Tamil Nadu Value Added Tax Act was set aside because the assessee was not given an effective opportunity to file objections and obtain a personal hearing. The court treated the denial of adequate hearing and non-consideration of further objections as a breach of natural justice, requiring reconsideration by the assessing authority. The matter was remitted for fresh orders after granting personal hearing and considering the assessee's objections and supporting materials.

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Issues: Whether the impugned tax and penalty order was liable to be set aside and the matter remitted for fresh consideration on the ground that adequate opportunity of hearing was not granted.

Analysis: The assessment proceedings were challenged on the footing that the assessee had sought time to file objections and requested a personal hearing, but the order was passed without granting the extension sought and without effectively considering the further objections. The dispute concerned levy under the Tamil Nadu Value Added Tax Act, including the treatment of the transaction and the imposition of penalty. In these circumstances, the requirement of fair hearing and observance of natural justice assumed importance, and the matter called for reconsideration by the assessing authority after giving the assessee an effective opportunity to present its case and supporting materials.

Conclusion: The impugned order was set aside and the matter was remitted to the assessing authority for fresh orders after providing an opportunity of personal hearing and considering the assessee's objections. The relief was thus granted in favour of the assessee to that extent.

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