Natural justice in tax assessment: lack of effective notice and hearing led to setting aside and remand for fresh assessment.

Assessment orders under Section 27 of the Tamil Nadu Value Added Tax Act, 2006 were set aside because effective service of notice and a genuine personal hearing were not afforded, despite an earlier remand requiring fair procedure. In tax matters carrying civil consequences, compliance with natural justice requires a real opportunity to file a reply and produce documents before assessment. The Madras HC held that the later orders did not follow the earlier direction and could not be sustained. The matter was remanded to the Assessing Officer for fresh assessment after granting notice, hearing, and opportunity to respond.

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Issues: Whether the assessment orders passed under Section 27 of the Tamil Nadu Value Added Tax Act, 2006, without effective service of notice and without affording a personal hearing, were liable to be set aside and the matter remanded for fresh assessment.

Analysis: The assessment proceedings were the second round of litigation after an earlier remand with a specific direction to follow the prescribed procedure and grant personal hearing. The record showed that the later assessment orders were passed on the footing that notice had been issued, but the opportunity was disputed on the ground of non-service of notice. In tax matters involving civil consequences, the requirement of notice and a genuine opportunity to explain is a fundamental facet of the principles of natural justice. The Court found that the assessment orders had not been passed in the manner directed earlier and that the denial of a real opportunity could not be sustained.

Conclusion: The assessment orders were set aside and the matter was remanded to the Assessing Officer for fresh consideration after affording a personal hearing and an opportunity to file reply and documents.

Final Conclusion: The appeals succeeded to the extent of securing a fresh assessment on notice and hearing, while the disputed assessments themselves did not survive.

Ratio Decidendi: Where a tax assessment with civil consequences is made without a genuine opportunity of hearing in the face of an earlier direction to follow fair procedure, the order is liable to be set aside and remanded for fresh adjudication.

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