Natural justice in tax assessment requires effective hearing, reasoned findings, and compliance with earlier directions before penalty action.

An assessment order and penalty notice were found unsustainable where the taxpayer was not given an effective hearing, earlier directions were not properly considered, and the order lacked a reasoned finding on the applicability of section 2(30)(c) of the Gujarat Value Added Tax Act, 2003, the accounting method, and the deduction claims. The penalty notice was treated as a cyclostyled notice, reinforcing the infirmity. The matter was therefore remanded for fresh de novo adjudication after hearing the taxpayer and complying with the earlier directions.

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Issues: Whether the assessment order and penalty notice were liable to be quashed for breach of natural justice and non-compliance with earlier directions, and whether the matter required remand for fresh de novo consideration.

Analysis: The assessment was found to have been passed without granting an effective opportunity of hearing and without properly considering the directions issued in the earlier round of litigation. The order also did not record clear findings on the applicability of Section 2(30)(c) of the Gujarat Value Added Tax Act, 2003 or deal with the accounting method and the deduction claims in a reasoned manner. The penalty notice was also treated as a cyclostyled notice. In these circumstances, the impugned assessment and penalty proceedings could not be sustained and the matter required reconsideration after hearing the petitioner and assigning reasons.

Conclusion: The assessment order and penalty notice were quashed and the matter was remanded for fresh de novo adjudication after granting an opportunity of hearing and complying with the earlier directions.

Final Conclusion: The petitioner obtained relief against the impugned tax assessment, but the dispute was sent back for a fresh decision on merits in accordance with law.

Ratio Decidendi: An assessment or penalty order passed without an effective hearing, without due consideration of binding earlier directions, and without a reasoned finding on the statutory basis of computation cannot be sustained and must be remitted for fresh consideration.

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