Natural justice in tax assessments: absence of show cause notice and hearing justified writ relief despite alternate remedy and delay.

Assessment orders under the Puducherry Value Added Tax Act were held invalid where no show cause notice was issued and no reasonable opportunity was afforded before reversing input tax credit and determining tax dues, contrary to the statutory mandate and natural justice. The Court also held that an alternate appellate remedy and delay did not bar writ jurisdiction under Article 226 in the presence of such procedural violation, particularly where the delay was satisfactorily explained. The impugned assessments were therefore quashed and remanded for fresh consideration after giving the dealer an opportunity to object.

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Issues: (i) whether assessment orders passed without issuing a show cause notice and without affording a reasonable opportunity under the Puducherry Value Added Tax Act, 2007 were valid; (ii) whether the availability of an alternate appellate remedy and the delay in approaching the Court barred exercise of writ jurisdiction under Article 226 of the Constitution of India.

Issue (i): whether assessment orders passed without issuing a show cause notice and without affording a reasonable opportunity under the Puducherry Value Added Tax Act, 2007 were valid.

Analysis: The assessment orders proceeded on alleged discrepancies including reversal of input tax credit and rate of tax issues, but they did not disclose issuance of any show cause notice. Section 24(6) of the Act specifically requires that no order reversing input tax credit and determining tax dues shall be passed without giving the dealer a reasonable opportunity to show cause. Since the recorded facts showed non-issuance of notice and the respondents did not dispute that position, the assessments were made in breach of the statutory mandate and in violation of natural justice.

Conclusion: The assessment orders were invalid and liable to be set aside.

Issue (ii): whether the availability of an alternate appellate remedy and the delay in approaching the Court barred exercise of writ jurisdiction under Article 226 of the Constitution of India.

Analysis: The existence of an alternate remedy is a self-imposed restraint and does not operate as an absolute bar where there is violation of natural justice. The delay was also explained by the petitioner's efforts to seek reopening of the assessments, the illness and death of its auditor, and the intervening pandemic. On those facts, the Court accepted the explanation and held that the writ petitions could be entertained despite the delay and the availability of appeal.

Conclusion: The writ petitions were maintainable and not barred by alternate remedy or delay.

Final Conclusion: The impugned assessments were quashed and the matter was sent back for fresh consideration after affording the petitioner an opportunity to object, failing which the assessments would stand restored.

Ratio Decidendi: An assessment made in breach of a statutory requirement to afford a reasonable opportunity of being heard is liable to be set aside, and the writ court may entertain the challenge notwithstanding an alternate remedy where the order suffers from violation of natural justice.

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