Natural justice in VAT penalty proceedings requires disclosure of relied-upon material before fresh adjudication

Assessment-cum-penalty proceedings under the Andhra Pradesh VAT Act were challenged for breach of natural justice because the dealer was not given the material relied on and the final order introduced grounds not contained in the show cause notice. The Court, following an earlier order in similar matters, accepted that the record did not show the necessary particulars had been supplied to the dealer. It held that the authorities must first furnish those particulars and give an opportunity to object before proceeding. The impugned order was set aside and the matter remitted for fresh action after disclosure of the required details.

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Issues: Whether the assessment-cum-penalty proceedings were liable to be set aside for want of disclosure of the material relied on and for introducing grounds not found in the show cause notice.

Analysis: The impugned proceedings were initiated under Sections 21(5) and 53 of the Andhra Pradesh Value Added Tax Act, 2005. The grievance was that the dealer was not supplied the material forming the basis of the proposed action and that the final order travelled beyond the show cause notice. The relief was sought on the ground of violation of the principles of natural justice. Following the earlier order relied upon in similar matters, the Court accepted that the assessment record did not contain the necessary particulars having been furnished to the dealer and that the authorities should proceed only after supplying those particulars and affording opportunity to object.

Conclusion: The impugned order was set aside and the matter was directed to be proceeded with afresh after furnishing the necessary details to the dealer, in favour of the assessee.

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