Natural justice bars withdrawal of a fiscal incentive without prior notice and hearing; cancellation was quashed.

Withdrawal of an existing fiscal incentive with civil consequences cannot be sustained without prior show-cause notice and an opportunity to be heard. The Court held that the cancellation of the eligibility certificate and sales tax deferral benefit was unsustainable because the affected party had acted on the basis of the granted scheme and executed agreement, yet no prior notice was issued before adverse action was taken. The Court did not examine the merits of whether the activity amounted to manufacture, as the foundational defect was breach of natural justice. The impugned proceedings were quashed, with liberty to the authorities to proceed afresh after issuing notice.

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Issues: Whether the withdrawal of the eligibility certificate and cancellation of the sales tax deferral benefit could be sustained without prior show-cause notice.

Analysis: The petitioner had been granted the benefit of an interest-free sales tax deferral scheme and had acted on the basis of the eligibility certificate and agreement already executed. The impugned action withdrew that benefit with civil consequences. The Court declined to examine the merits of whether the industrial activity amounted to manufacture, since the foundational defect was the absence of prior notice. In matters involving withdrawal of an existing benefit, the affected party must be given an opportunity to respond before adverse action is taken.

Conclusion: The impugned proceedings were unsustainable for want of show-cause notice and were quashed. The petitioner succeeded, with liberty to the authorities to proceed afresh after issuing notice.

Final Conclusion: Adverse administrative action withdrawing a fiscal incentive cannot stand when it is taken without affording prior notice and hearing.

Ratio Decidendi: When withdrawal of a granted fiscal benefit entails civil consequences, compliance with natural justice by issuing a prior show-cause notice is mandatory.

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