Natural justice in VAT assessment: conditional opportunity granted to contest penalty after alleged denial of hearing.

A challenge to an assessment and penalty order under the Puducherry Value Added Tax Act, 2007 raised the alleged denial of a personal hearing and breach of natural justice. Although the petition was also affected by unexplained delay, the Court balanced that delay against the hearing grievance and granted conditional relief. On payment of 15% of the tax quantified in the impugned order, the proceedings were to be treated as a show cause notice, objections could be filed, recovery of the balance would remain stayed, the bank attachment would be lifted, and the assessing authority would hear the petitioner and redo the assessment in accordance with law.

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Issues: Whether the assessment and penalty order under the Puducherry Value Added Tax Act, 2007 should be interfered with on the ground of alleged denial of personal hearing and lack of opportunity, and whether the petitioner should be granted a conditional opportunity to object and have the matter re-done.

Analysis: The writ petition challenged the assessment order principally on the ground that the petitioner was not afforded a personal hearing before penalty was imposed, invoking the requirement of hearing under Section 24(3) of the Puducherry Value Added Tax Act, 2007 and the broader principles of natural justice. At the same time, there was unexplained delay in approaching the Court after the impugned order, which would normally have justified dismissal. Balancing the revenue interest with the grievance of denial of hearing, the Court considered it appropriate to grant a conditional opportunity. The petitioner was directed to pay 15% of the tax quantified in the impugned order, after which the proceedings would be treated as a show cause notice, objections could be filed, recovery of the balance would remain stayed, the bank attachment would be lifted, and the assessing authority would hear the petitioner and redo the assessment in accordance with law.

Conclusion: The petitioner was granted conditional relief and an opportunity for fresh consideration, and the impugned proceedings were not finally sustained against the petitioner.

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