Natural justice in tax assessment requires a fair hearing and disclosure; virtual hearing was appropriate and the order was set aside.

An assessment order was set aside because the assessee was denied a fair and effective opportunity of hearing, including proper notice and disclosure of material relied upon. The Court held that prior participation made it difficult to accept that the assessee had voluntarily abandoned the matter, and that fairness required disclosure before reliance on adverse material. In the pandemic context and given the assessee's location outside the State, an effective opportunity could suitably be provided through a virtual hearing. The existence of an alternative appellate remedy did not bar writ interference where there was a clear breach of natural justice. The matter was remitted for fresh assessment after hearing the assessee.

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Issues: Whether the assessment order was vitiated for breach of natural justice on account of inadequate hearing and denial of an effective opportunity to the assessee, including through virtual hearing during the pandemic.

Analysis: The assessee asserted that the scheduled hearing on 23.11.2020 did not take place and that no subsequent hearing notice was duly served. The revenue did not convincingly establish service of later notices. The Court held that where an assessee had earlier participated in the proceedings, it was difficult to accept that it would voluntarily abandon the matter and suffer a substantial ex parte demand. The Court further observed that if the department proposed to rely on material not already within the assessee's knowledge or possession, fairness required prior disclosure. In the circumstances, and having regard to the constraints caused by the pandemic and the location of the assessee's head office outside the State, the Court held that an effective opportunity could appropriately be afforded through virtual hearing. The availability of an alternative remedy did not bar interference because there was a clear breach of natural justice.

Conclusion: The assessment order was vitiated and was set aside; the matter was remitted for fresh assessment after granting the assessee an effective virtual hearing.

Final Conclusion: The proceedings were revived for fresh adjudication, with the assessee to be heard again and all other contentions left open.

Ratio Decidendi: A tax assessment order can be quashed where the assessee is denied a fair and effective opportunity of hearing, and the existence of an alternative appellate remedy does not preclude writ interference in the face of a clear breach of natural justice.

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