Effective personal hearing is mandatory before VAT reassessment, especially where input tax credit reversal and penalty are proposed.

Reassessment under Section 27 of the Tamil Nadu VAT Act requires a reasonable and effective opportunity before reversal of input tax credit, tax determination, and penalty under Section 27(3). A notice merely inviting the dealer to appear on any working day is insufficient if the authority does not first consider the objections, apply its mind to the explanation, or deal with refund-related materials. Reliance on Section 13(1)(c) without first calling for the certificate was also improper. The reassessment order was therefore unsustainable for breach of natural justice, and the matter was remanded for fresh consideration after hearing the dealer.

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Issues: Whether the reassessment order passed under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 was vitiated for denial of an effective opportunity of personal hearing and for non-compliance with the principles of natural justice.

Analysis: The reassessment was made under Section 27, where the proviso to Section 27(2) requires a reasonable opportunity before reversal of input tax credit and determination of tax due. The proceeding also included levy of penalty under Section 27(3), making a personal hearing more necessary. The notice merely stated that the dealer could appear on any working day, but the assessment authority was still required to first consider the objections and apply its mind to the explanation before finalising the proposal. The petitioner was also not afforded an effective opportunity on the refund-related materials and the authority relied on a requirement under Section 13(1)(c) without first calling for the certificate. The hearing offered was therefore not an effective opportunity.

Conclusion: The reassessment order was unsustainable for breach of natural justice and denial of effective personal hearing. The writ petition was allowed, the impugned order was set aside, and the matter was remanded for fresh consideration and redetermination after hearing the petitioner.

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