Reasoned tax clarification and fair hearing requirements led to fresh assessment after the impugned order was set aside.

A tax clarification and the consequential assessment were held unsustainable because they gave no reasons, did not cite the statutory basis, and were issued without a fair opportunity for the assessee to object. The authority also failed to consider the claim that cotton seeds used for sowing were exempt under the relevant schedule entry. As the assessment was passed without waiting for objections or hearing the petitioner, it was set aside and the matter was remitted for fresh assessment after giving a reasonable opportunity to object and be heard.

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Issues: Whether the impugned clarification and assessment order were liable to be set aside for want of reasons and opportunity of hearing, and whether a fresh assessment was required.

Analysis: The communication rejecting the request for amendment and the clarification treating hybrid cotton seeds as taxable did not disclose reasons or cite the applicable statutory basis. The assessee was not given a proper opportunity to place objections before the clarification was issued. The assessment order was also passed without waiting for the objections and without considering the contention that cotton seeds used only for sowing purposes were exempt under the relevant schedule entry. In these circumstances, the assessment could not stand and the assessing authority was required to reconsider the matter independently.

Conclusion: The impugned assessment order was set aside and the matter was remitted for fresh assessment after giving the petitioner a reasonable opportunity to object and be heard.

Ratio Decidendi: A clarification and assessment affecting tax liability must be supported by reasons and preceded by a fair opportunity of hearing; otherwise, the consequential assessment is liable to be set aside and reconsidered afresh.

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