Pre-determined show cause notice vitiates tax and penalty proceedings; fresh notice and hearing required.

A revised show cause notice under the Tamil Nadu VAT Act and CST Act was vitiated because it had already concluded that tax and penalty were leviable and treated the assessee's objections as immaterial. Such pre-judgment deprived the assessee of a fair opportunity to answer the proposal with objections and documentary evidence. The Madras HC set aside the defective notice and remitted the matter for issuance of a fresh notice and fresh adjudication after hearing the assessee.

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Issues: Whether the revised show cause notice proposing tax and penalty under the Tamil Nadu Value Added Tax Act and the Central Sales Tax Act was liable to be set aside for being pre-determined and for requiring a fresh notice and consideration of objections.

Analysis: The notice had already recorded a conclusion on the levy of tax and penalty and treated the assessee's objections on control and possession as immaterial, showing that the authority had made up its mind before considering the explanation. In such circumstances, the notice could not be sustained, and the assessee was entitled to a fresh notice and a fair opportunity to place objections and documentary evidence before the authority. The appellate court therefore interfered with the order that had merely directed the assessee to respond to the defective notice.

Conclusion: The impugned revised notice was set aside and the matter was remitted for issuance of a fresh notice and fresh adjudication after hearing the assessee.

Ratio Decidendi: A show cause notice that discloses a concluded decision on tax and penalty, instead of keeping the issue open for consideration of objections, is vitiated by pre-judgment and cannot be sustained.

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