Natural justice in reassessment: undisclosed material and pending customs adjudication made two demand heads unsustainable.

Reassessment based on website-derived purchase mismatch and alleged interstate sales suppression was set aside because the taxpayer was not furnished the relied-on invoice and dealer particulars, depriving it of an effective reply and personal hearing. The reassessment on alleged mis-declaration of value, based solely on DRI material, was also premature because customs adjudication had not concluded and the underlying duty liability had not attained finality. The court therefore interfered in part, directed disclosure of the relied-on materials and opportunity to object, and left further action on the third head open until completion of customs proceedings.

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Issues: (i) Whether the reassessment based on mismatch of purchase details and alleged interstate sales suppression, without furnishing the supporting website-derived particulars, was sustainable. (ii) Whether the reassessment based on alleged mis-declaration of value, founded only on DRI material and before completion of customs adjudication, could be sustained. (iii) What relief, if any, should follow.

Issue (i): Whether the reassessment based on mismatch of purchase details and alleged interstate sales suppression, without furnishing the supporting website-derived particulars, was sustainable.

Analysis: The revised assessment under these heads was founded on materials taken from the departmental website, but the details sought by the assessee, including invoice particulars and dealer identity details, were not furnished. Without disclosure of the basic material relied on, an effective reply and meaningful personal hearing could not be given.

Conclusion: The reassessment under these two heads is unsustainable and liable to be set aside for breach of natural justice.

Issue (ii): Whether the reassessment based on alleged mis-declaration of value, founded only on DRI material and before completion of customs adjudication, could be sustained.

Analysis: The demand on this head was not based on any independent enquiry by the taxing authority and rested solely on information from the DRI. The DRI proceedings had not culminated in adjudication, so the duty liability and the value basis for the imported goods had not yet attained finality. In such circumstances, the alleged sales suppression could not be conclusively determined, and independent proceedings by the taxing authority were premature.

Conclusion: The reassessment on the mis-declaration of value head could not be sustained at that stage, and further action was left open only after the customs adjudication.

Issue (iii): What relief, if any, should follow.

Analysis: Since two heads suffered from lack of disclosure and the third head depended upon the outcome of pending customs adjudication, the proper course was partial interference with directions for fresh consideration on the disclosed materials and deferment of the third head until the customs proceedings concluded.

Conclusion: The writ petitions were partly allowed with directions to furnish the relied-on particulars, grant opportunity of objection and personal hearing, and permit further action on the third head only after the customs adjudication.

Final Conclusion: The reassessment was interfered with in part, the first two heads were set aside for fresh consideration, and the third head was left to be pursued only after completion of the customs proceedings.

Ratio Decidendi: A reassessment founded on undisclosed material violates natural justice, and a tax demand based solely on pending customs allegations cannot be finalized until the underlying duty liability has been adjudicated and independently verified.

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