Natural justice in reassessment: fresh grounds need reasonable time to respond, and a short notice can invalidate the demand.

Reassessment proceedings must afford a reasonable opportunity to meet fresh grounds raised for the first time in a final notice; giving only three days to object to new allegations on sales return disallowance and excess tax collection was held to be unfair and contrary to natural justice. The existence of an appellate remedy did not prevent writ intervention where the opportunity to respond was inadequate. The reassessment order and demand notice were quashed, and the matter was remitted to the prescribed authority for reconsideration after granting reasonable opportunity.

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Issues: Whether the reassessment order and demand notice were liable to be quashed for violation of the principles of natural justice in granting only three days to respond to fresh grounds raised in the final notice.

Analysis: The reassessment proceedings had been pending for a substantial period, and the earlier proposition notice did not cover the later grounds relating to disallowance of sales return and excess tax collection. Those matters were introduced for the first time in the final notice, yet only three days' time was given to file objections. A further request for time was rejected on the ground of limitation. The Court held that reasonable opportunity is an essential requirement before concluding reassessment and that the short time granted was not a fair opportunity to meet new allegations. The existence of an appellate remedy did not bar writ intervention where natural justice was breached.

Conclusion: The reassessment order and demand notice were unsustainable and were quashed. The matter was remitted to the prescribed authority to reconsider the reassessment after granting reasonable opportunity to the petitioner.

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