Concluded tax assessment and refund adjustment cannot stand without lawful reassessment and notice-and-hearing safeguards.

A fresh tax demand could not be raised against a concluded VAT assessment without first invoking the statutorily prescribed reassessment procedure and complying with natural justice. Because the assessment had already been finalised and the disputed liability quantified and paid, the further demand and refund adjustment were unsustainable in the absence of any show cause notice or hearing. Bombay HC therefore quashed the impugned communications and directed refund of the admitted amount in accordance with law.

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Issues: Whether the impugned demand and refund adjustment could be sustained without reopening the concluded assessment in the manner known to law and without affording the petitioner an opportunity of hearing.

Analysis: The assessment for the relevant financial year had already been finalised and the tax liability on the disputed statutory forms stood quantified and paid. In that situation, any further demand could arise only through a lawful reassessment procedure under the governing VAT regime. The record did not disclose compliance with the reassessment mechanism, nor any show cause notice or hearing before raising the fresh demand and adjusting the refund against alleged dues. The impugned action was therefore inconsistent with the statutory scheme and offended the requirements of natural justice.

Conclusion: The impugned communications could not be sustained and were required to be quashed. The petitioner succeeded, and the admitted refund amount was directed to be refunded in accordance with law.

Ratio Decidendi: A fresh tax demand cannot be raised against a concluded assessment except by following the statutorily prescribed reassessment procedure and by complying with natural justice, including notice and hearing.

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