Invalid service of tax notices and assessment orders breaches natural justice and renders the demand unsustainable.

Service of pre-assessment notices and assessment orders must comply with the prescribed mode under the Telangana State Value Added Tax Rules, 2005; service by e-mail was not contemplated, and the record did not establish valid service for the relevant periods. Returned postal covers with endorsements such as "addressee left" showed that the notices and orders were not effectively served, depriving the assessee of an opportunity to object and participate. That failure caused prejudice and a breach of natural justice, so the assessment orders and consequential demand notice were liable to be set aside and could not be sustained.

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Issues: Whether the assessment orders and consequential demand notice could be sustained when the pre-assessment show-cause notices and the assessment orders were not served on the assessee in the manner prescribed, and whether such non-service caused a violation of natural justice rendering the demand unenforceable.

Analysis: The challenge turned on the mode and proof of service. Rule 64(1)(b) of the Telangana State Value Added Tax Rules, 2005 prescribed the manner of service and did not contemplate service by e-mail. The record did not establish valid service of the show-cause notices or the assessment orders for the relevant periods, and the postal covers showed returned delivery with endorsements such as "addressee left". In the absence of valid service, the assessee was deprived of the opportunity to object and participate, resulting in prejudice and breach of natural justice.

Conclusion: The assessment orders and the consequential demand notice could not be sustained and were liable to be set aside.

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