Invalid service and denial of hearing under KVAT led to quashing of reassessment and demand notice, with remand for fresh consideration.

Reassessment under the Karnataka Value Added Tax Act was set aside because the notice was returned unserved and the record did not show effective service at the business or residential address, nor any opportunity to produce books of account or be heard before completion of the reassessment. Non-compliance with the service requirement under Section 39(1) and the procedure under Rule 176 amounted to breach of natural justice. The reassessment order and consequential demand notice were quashed, and the matter was remanded for fresh consideration after granting a hearing.

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Issues: Whether the reassessment order and consequential demand notice were liable to be quashed for want of service of notice and denial of opportunity of hearing under the KVAT Act and Rules.

Analysis: The notice for reassessment was returned unserved with the remark that there was no such firm at the address. The record did not show effective service at the office or residential address, nor did it show that the petitioner was afforded an opportunity to produce books of account or to be heard before the reassessment was completed. In such circumstances, the service requirements under Section 39(1) of the Karnataka Value Added Tax Act, 2003 and the procedure contemplated by Rule 176 of the Karnataka Value Added Tax Rules, 2005 were not complied with, resulting in breach of natural justice.

Conclusion: The reassessment order and the consequential demand notice were quashed, and the matter was remanded for fresh consideration after granting an opportunity of hearing.

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