Natural justice in interest liability assessments: orders set aside and remanded for fresh hearing on merits.

Assessment orders on interest liability were set aside because they had been passed without effective communication and without giving the taxpayer a hearing. The High Court held that, where the dispute concerned only interest liability and the taxpayer had already discharged the stated amounts, a fair opportunity to file a reply and be personally heard was required before finalising the demand. The matter was remanded for fresh consideration after affording a reasonable opportunity of hearing and passing a fresh order.

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Issues: Whether the impugned assessment orders relating to interest liability, passed without effective communication and without hearing the petitioner, were liable to be set aside and the matter remanded for fresh consideration.

Analysis: The impugned orders were found to have been issued without hearing the petitioner. The record also showed that the petitioner had discharged the stated interest amounts. Since the dispute related only to interest liability, the petitioner was entitled to a fair opportunity to contest the demand on merits, including by filing a reply and being heard personally.

Conclusion: The impugned orders were set aside and the matters were remanded to the respondent for reconsideration after affording the petitioner a reasonable opportunity, including personal hearing, and passing fresh orders.

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