Proper show cause notice is mandatory in reassessment; a summons for hearing cannot substitute statutory procedure.

A reassessment under the Tamil Nadu Value Added Tax Act was set aside because the assessing authority did not issue a proper show cause notice before finalising the demand. A summons calling for documents and attendance for hearing was held insufficient, as it did not set out the proposed basis of reassessment, the escaped turnover, or the tax proposed to be levied. The court treated compliance with the statutory notice-and-hearing procedure, as earlier directed, as mandatory. The reassessment order was quashed and the matter remitted for issuance of a proper notice, reply, hearing, and fresh order in accordance with law.

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Issues: Whether the reassessment order was liable to be quashed for want of a proper show cause notice and non-compliance with the procedure prescribed for reassessment under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: The assessment was reopened on the premise of escaped turnover and wrong availment of input tax credit. The earlier round of litigation had already held that the prior communication was not a proper show cause notice and had directed issuance of a fresh notice followed by an opportunity of hearing. In the present proceedings, the subsequent communication was only a summons calling for documents and attendance for personal hearing, not a notice setting out the proposed basis of reassessment, the escaped turnover, or the tax proposed to be levied. Since the mandatory step of issuing a proper show cause notice preceded the final reassessment, the procedure adopted was held to be contrary to the statutory scheme and the earlier direction.

Conclusion: The reassessment order was quashed and the matter was remitted to the assessing authority to issue a proper show cause notice, afford an opportunity of reply and hearing, and then pass a fresh order in accordance with law.

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