Natural justice in tax assessment requires a practical hearing before liability is fixed; assessment set aside for procedural unfairness.

An assessment order was held unsustainable where the taxpayer had repeatedly sought adjournment and further time to produce records relating to classification of taxable items and alleged purchase suppressions, but the authority proceeded without giving an effective opportunity to respond. The procedure was found inconsistent with the requirement of a practical and fair hearing before fixing tax liability, and therefore contrary to the principles of natural justice and Section 25(1) of the Kerala Value Added Tax Act, 2003. The assessment was set aside on that basis.

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Issues: Whether the assessment order was vitiated for breach of natural justice and non-compliance with Section 25(1) of the Kerala Value Added Tax Act, 2003.

Analysis: The order was passed in the backdrop of repeated requests for adjournment and further time to verify records relating to classification of taxable items and alleged purchase suppressions. The record showed that the petitioner sought time to gather supporting material, yet the assessment proceeded without affording an effective opportunity to meet the allegations. In these circumstances, the requirement of a practical and effective hearing before fixing tax liability was not satisfied, and the procedure adopted was inconsistent with the fairness contemplated by Section 25(1).

Conclusion: The assessment order was unsustainable and liable to be set aside for violation of principles of natural justice and Section 25(1) of the Kerala Value Added Tax Act, 2003.

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