Natural justice in tax assessment: denial of personal hearing and adequate opportunity led to quashing and remand.

The Madras HC held that an assessment under the Tamil Nadu Value Added Tax Act was vitiated for breach of natural justice because the assessee was not afforded a personal hearing or sufficient opportunity before finalisation. The Court noted that the departmental circular required reasonable opportunity and an invariable personal hearing before passing assessment orders, and it followed the principle that non-compliance with the prescribed procedure amounts to denial of natural justice. As the demand was founded on material from the Department's own website and the procedural safeguards were not observed, the assessment order was quashed and the matter remanded for fresh consideration after proper hearing.

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Issues: Whether the assessment order was liable to be quashed for violation of principles of natural justice, including failure to afford personal hearing and sufficient opportunity before finalising the assessment.

Analysis: The assessment was made under the Tamil Nadu Value Added Tax Act, 2006 after a pre-assessment notice under Section 22(4) was said to have been served. The Court noted that the departmental circular dated 03.02.2014 required assessing officers to grant reasonable opportunity and to invariably afford personal hearing before passing orders. The Court also relied on the Division Bench view that denial of personal hearing and non-compliance with the prescribed procedure amounts to breach of natural justice. On the facts, the demand was based on material obtained from the Department's own website, and the petitioner was not afforded the procedural safeguards mandated by the circular and governing principles.

Conclusion: The assessment order was vitiated for breach of natural justice and was quashed. The matter was remanded for fresh consideration after granting sufficient opportunity and personal hearing.

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