Natural justice in tax reassessment: failure to hear the assessee and consider evidence led to remand for fresh consideration.

Reassessment under the Kerala Value Added Tax Act was set aside because the authority did not afford a meaningful hearing and failed to consider the assessee's request to produce books of account and invoices to support the transaction. The court held that tax adjudication must be fair and reasonable, and that non-consideration of material evidence and the hearing request amounted to a serious procedural infirmity. The matter was remitted to the authority for fresh consideration in accordance with natural justice.

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Issues: Whether the reassessment order was liable to be set aside for violation of the requirement of hearing and non-consideration of the assessee's request for production of books of account and invoices, and whether the matter should be remitted for fresh consideration.

Analysis: The reassessment was made under Section 25 of the Kerala Value Added Tax Act, 2003 on the basis of an allegation that the movement of goods was contrary to Section 47(2) of the Act. The assessee had filed an interim reply and also sought summoning of relevant books of account and invoices from dealers and suppliers to establish the genuineness of the transaction. That request was not considered before fixing the tax liability. In tax adjudication, the authority is required to act fairly and reasonably and to afford a real opportunity of being heard. Non-consideration of the request and absence of meaningful hearing constituted a serious procedural infirmity.

Conclusion: The reassessment order was unsustainable for breach of principles of natural justice and was set aside, with the matter remitted to the authority for fresh consideration.

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