Natural justice in VAT reassessment: notice objections must be heard before tax authorities finalise the assessment.

A reassessment under the Karnataka Value Added Tax Act was unsustainable where the taxpayer was not given an opportunity to file objections to the proposition notice and place its case before the tax authority. The Karnataka High Court held that principles of natural justice required a meaningful hearing, even though the assessment had been completed during insolvency proceedings and books of account were stated to have been furnished by the interim resolution professional's representative. The reassessment order was set aside and the matter remitted to the prescribed authority for a fresh assessment after considering the taxpayer's objections.

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Issues: Whether the reassessment order passed under the Karnataka Value Added Tax Act without affording the petitioner an opportunity to file objections and place its case was sustainable.

Analysis: The assessment had been completed during the pendency of insolvency proceedings and the books of account were said to have been furnished by the officer representing the interim resolution professional. Even so, the Court held that the principles of natural justice required that the petitioner be given an opportunity to file objections to the proposition notice and to present its claim before the tax authority.

Conclusion: The reassessment order was set aside and the matter was remitted to the prescribed authority to redo the assessment after considering the petitioner's objections.

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