Natural justice breached by non-supply of relied-upon documents, leading to setting aside of demand and penalty.

The demand and penalty could not be sustained because the department failed to comply with the earlier remand direction to supply copies of all relied upon documents before adjudication. That non-supply deprived the assessee of a fair opportunity to defend the case and amounted to a violation of natural justice. The tribunal therefore did not examine the limitation or merits objections and allowed the appeal on the ground of procedural unfairness.

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Issues: Whether the demand and penalty could be sustained when copies of the relied upon documents were not supplied in compliance with the earlier remand direction, thereby violating the principles of natural justice.

Analysis: The earlier order in the same proceedings had specifically directed the department to supply copies of all relied upon documents and thereafter proceed with adjudication. The subsequent adjudicating order could not disregard that direction on the footing that the documents had already been supplied, especially after the tribunal had already accepted the assessee's grievance regarding non-supply. In the absence of supply of the documents as directed, the assessee was denied a fair opportunity to defend the case. The tribunal therefore did not examine the objections on limitation or on merits.

Conclusion: The impugned demand and penalty could not be sustained and the appeal was allowed on the ground of non-compliance with the earlier direction and violation of natural justice.

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