Natural justice in tax assessment bars revision of inter-State sales liability without prior notice and hearing.

An assessment revising tax liability on inter-State sales for want of Form C declarations cannot be sustained where no prior notice or reasonable opportunity of hearing was given. The High Court applied the statutory assessment procedure and the requirements of fair hearing and natural justice, holding that the authority must allow the assessee to explain its position and produce supporting material before altering the tax demand. The assessment was therefore treated as notice, with liberty to file objections and evidence, followed by a fresh decision after personal hearing.

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Issues: Whether the assessment order levying tax on inter-state sales for want of Form C declarations could be sustained when no prior notice or reasonable opportunity of hearing was afforded.

Analysis: The impugned assessment was made by accepting the turnover figures returned by the assessee, but altering the tax liability on the basis that the inter-state transactions were unsupported by Form C declarations. The governing provision contemplates assessment in the manner prescribed, and the authority was required to follow the statutory procedure. The absence of prior notice and the denial of a meaningful opportunity to explain the position or produce supporting material amounted to non-compliance with the requirements of fair hearing and natural justice.

Conclusion: The assessment order could not be sustained and was directed to be treated as notice, with liberty to file objections and supporting materials, followed by a fresh decision after personal hearing.

Ratio Decidendi: An assessment affecting tax liability cannot be sustained where it is made without prior notice and without affording a reasonable opportunity of hearing, particularly when the statute requires the authority to proceed in accordance with prescribed assessment procedure.

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