Natural justice in penalty proceedings requires a real opportunity to respond before adverse orders are imposed.

Penalty proceedings under the Kerala Value Added Tax Act were set aside where the assessee had sought copies of seized documents and time to object, and the surrounding circumstances showed that the managing partner was affected by a close family bereavement and illness. The Court accepted that the hearing notice may not have received due attention in the ordinary course of human conduct. It held that, where a reasonable opportunity to defend is not effectively available, fairness requires a fresh chance before adverse penalty orders are made. The matter was remitted for reconsideration after granting an opportunity of hearing.

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Issues: Whether the penalty orders passed under the Kerala Value Added Tax Act, 2003 were liable to be quashed for breach of natural justice in view of the request for time and the surrounding circumstances.

Analysis: The petitioner had sought copies of the seized documents and time to file objections. Although notice of hearing was issued, the materials placed before the Court showed that the Managing Partner was occupied with the serious illness and subsequent death of his grandmother during the relevant period. In these circumstances, the explanation that the hearing notice did not receive due attention was found probable in the ordinary course of human conduct. The Court held that, when a reasonable opportunity to defend a penalty proceeding is not effectively available, fairness requires that the assessee be granted another chance before adverse orders are passed.

Conclusion: The penalty orders were quashed and the matter was directed to be reconsidered afresh after affording the petitioner an opportunity of hearing.

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