Natural justice in tax reassessment: personal hearing and a speaking order were mandatory before final assessment could stand.

The Madras HC held that reassessment orders under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 were unsustainable because the assessing authority did not grant a personal hearing, did not issue notice fixing a date for decision, and did not pass a reasoned speaking order. As a quasi-judicial authority, the officer was required to follow the mandatory procedure under Section 27(1) and 27(2) and comply with natural justice before finalising the assessment. The reassessment orders were set aside and the matter was remitted for fresh consideration after notice, personal hearing, and a speaking order in accordance with law.

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Issues: Whether the reassessment orders under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 were valid when passed without granting personal hearing and without following the mandatory procedure of passing a speaking order.

Analysis: The impugned reassessment proceedings were based on inspection materials and the dealer had specifically sought time to reconcile accounts and requested personal hearing before final orders were passed. The Court held that no notice was issued fixing a date for decision and that the assessing authority, functioning as a quasi-judicial authority, was required to act independently, follow the mandatory procedure under Section 27(1) and 27(2) of the Act, and afford an opportunity of hearing before concluding the matter. The absence of personal hearing and the failure to pass a reasoned order rendered the assessment unsustainable.

Conclusion: The reassessment orders were set aside and the matter was directed to be reconsidered after issuing notice, granting personal hearing, and passing a speaking order in accordance with law.

Ratio Decidendi: A quasi-judicial tax assessment made without affording personal hearing and without a reasoned speaking order, where such procedural safeguards are required, is invalid for breach of natural justice and statutory procedure.

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