Natural justice bars refund adjustment against tax dues without notice and hearing; adjustment order set aside and remanded.

Refund adjustment against alleged tax dues cannot be sustained where the dealer was not given notice or an opportunity to object. Because the adjustment was made while earlier assessment and rectification proceedings were already remitted for reconsideration, the refund issue and any consequential demand had to be examined afresh after hearing the dealer. The adjustment order was therefore held unsustainable for breach of natural justice, set aside, and the matter remanded for fresh consideration after notice and objections.

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Issues: Whether the adjustment of the refund amount against alleged tax dues could be sustained without issuing a fresh notice and granting an opportunity to object.

Analysis: The refund adjustment was made without affording the dealer an opportunity to place objections. The challenge also arose against a background where earlier proceedings concerning the assessment and rectification were already remitted for reconsideration. In such circumstances, any adjustment of the refund and the consequential demand required reconsideration after notice and hearing, particularly when the matter was still intertwined with the pending remand proceedings.

Conclusion: The adjustment order was unsustainable for breach of natural justice and was liable to be set aside. The matter was remanded for fresh consideration after issuing notice and permitting objections.

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