Natural justice in tax clarification proceedings requires a hearing before rejection; non-compliance vitiates the order and leads to remand.

Under Section 48A of the Tamil Nadu VAT Act and Rule 12A of the Rules, an application for clarification on tax rate cannot be rejected without giving the applicant a reasonable opportunity of being heard and recording reasons for rejection. The Madras HC found that the clarification order had been passed without affording a personal hearing and without following the prescribed procedure, amounting to a violation of natural justice. The impugned order was therefore set aside, and the matter was remitted for fresh consideration after granting the petitioner a personal hearing.

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Issues: Whether the clarification order passed under Section 48A of the Tamil Nadu Value Added Tax Act, 2006 was liable to be set aside for failure to afford the petitioner a personal hearing and for non-compliance with the prescribed procedure under Rule 12A of the Tamil Nadu Value Added Tax Rules, 2007.

Analysis: The statutory scheme under Section 48A and Rule 12A requires that an application for clarification on the rate of tax cannot be rejected without giving the applicant a reasonable opportunity of being heard, and reasons for rejection must be recorded. The impugned clarification was passed without affording such hearing. Since the procedure mandated by the Act and Rules was not followed, the order suffered from violation of natural justice and could not be sustained.

Conclusion: The impugned order was set aside and the matter was remitted for fresh consideration after granting a personal hearing to the petitioner.

Ratio Decidendi: Where the governing statute and rules expressly require a reasonable opportunity of being heard before rejection of an application for clarification, non-observance of that mandatory requirement vitiates the order and justifies remand for fresh decision.

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