Natural justice bars penalty when remand directions for cross-examination and record verification are ignored.

A penalty under the KGST Act was held unsustainable where the authority passed the impugned order without complying with binding remand directions to allow cross-examination of the purchaser and to verify the relevant Rubber Board records. The court noted that the earlier penalty had already been found inadequately supported by evidence, and no counter affidavit or verification report was produced to show compliance. The order was set aside, leaving the respondents free to proceed afresh in accordance with law after giving proper opportunity.

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Issues: Whether the penalty order under Section 45A of the KGST Act could be sustained when the appellate authority had set aside the earlier penalty and directed cross-examination of the purchaser and verification of the relevant records, but those directions were not complied with before passing the impugned order.

Analysis: The appellate authority had specifically found that the earlier penalty was not supported by sufficient evidence and had remanded the matter with directions to afford the dealer an opportunity to cross-examine the purchaser and to verify the Rubber Board records. The impugned order was passed without showing compliance with those directions. No counter affidavit or verification report was produced even after substantial delay. In the absence of adherence to the remand directions and without proper opportunity to meet the allegations, the penalty could not be justified.

Conclusion: The penalty order was unsustainable and was set aside. The matter was left open to the respondents to proceed afresh in accordance with law after giving proper opportunity to the petitioner.

Ratio Decidendi: A penalty order cannot be sustained where the authority fails to comply with binding remand directions requiring cross-examination and verification of records, thereby violating natural justice and rendering the evidentiary basis insufficient.

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