Personal hearing before appellate order is essential; orders and consequential demand notice were set aside for breach of natural justice.

The Madras HC held that appellate orders passed without affording the petitioner a personal hearing were vitiated for breach of natural justice, because the defect went to the root of the appellate disposal. Those orders were set aside and the appeals were remitted for fresh consideration on merits after hearing the petitioner. The Court also held that the consequential demand notice, being founded solely on the set-aside appellate orders, could not survive and was therefore set aside. The underlying tax disputes were left open for fresh adjudication by the appellate authority.

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Issues: (i) Whether the appellate orders were liable to be set aside for want of personal hearing and breach of natural justice; (ii) Whether the demand notice issued pursuant to those appellate orders could survive.

Issue (i): Whether the appellate orders were liable to be set aside for want of personal hearing and breach of natural justice.

Analysis: The petitioner was not afforded an opportunity of personal hearing before the appellate authority. An order passed without such opportunity, where hearing is required, offends the principles of natural justice. The defect went to the root of the appellate disposal, warranting interference and a fresh decision on merits after hearing the petitioner.

Conclusion: The appellate orders were set aside and the appeals were remitted to the appellate authority for fresh consideration after granting personal hearing.

Issue (ii): Whether the demand notice issued pursuant to those appellate orders could survive.

Analysis: The demand notice was founded on the appellate orders that had been set aside. Once the foundation of the demand was removed, the notice could not be sustained. Its fate was therefore consequential to the remand of the appeals.

Conclusion: The demand notice was set aside.

Final Conclusion: The assessees obtained relief against both the appellate orders and the consequential demand notice, while the underlying tax disputes were left open for fresh adjudication by the appellate authority.

Ratio Decidendi: An appellate order passed without affording personal hearing, where such hearing is required, is vitiated for breach of natural justice, and any consequential demand based solely on that order cannot survive.

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