Natural justice in reassessment requires an effective hearing before adverse findings are made on disputed material.

Reassessment based on disputed subcontract payments and Form 20H material was held unsustainable where the assessee sought reconciliation and no effective hearing was afforded before adverse findings were recorded. Mere issue of notice and receipt of a reply did not satisfy procedural fairness when the final order depended on material requiring further explanation. The reassessment was set aside for breach of natural justice, and the matter was remitted for fresh consideration after granting an effective opportunity of hearing.

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Issues: Whether the reassessment order was vitiated for breach of the principles of natural justice because the assessee was not given an effective opportunity of hearing before adverse findings were recorded.

Analysis: The reassessment under Section 25 of the Kerala Value Added Tax Act, 2003 reopened the accepted self-assessment on the basis of disputed subcontract payments and Form 20H-related material. The assessee had specifically sought an opportunity to reconcile the disputed data and explain the material relied on, and the record did not show any effective hearing after the relevant details were furnished. Procedural fairness cannot be treated as satisfied by the mere issue of notice and receipt of reply when the final order rests on adverse findings drawn from material that required further explanation. In these circumstances, the absence of a meaningful hearing before finalising the reassessment rendered the order unsustainable.

Conclusion: The reassessment order was vitiated by breach of natural justice and could not be sustained.

Final Conclusion: The impugned reassessment was set aside and the matter was remitted for fresh consideration after affording the assessee an effective opportunity of hearing.

Ratio Decidendi: When a reassessment is founded on disputed material and the assessee seeks reconciliation or explanation, the authority must afford an effective opportunity of hearing before recording adverse findings; failure to do so vitiates the order.

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