Natural justice in input tax credit reversal requires prior objections, effective hearing, and a reasoned merits order.

An order reversing input tax credit under the Tamil Nadu VAT Act was procedurally defective where earlier notices and detailed objections were ignored and no effective personal hearing was granted. The commentary notes that failure to refer to the prior proceedings, to consider the dealer's objections, and to afford the promised hearing was inconsistent with statutory procedure and the principles of natural justice, particularly after a change in authority. It states that the matter was remanded for fresh consideration after comprehensive notice, receipt of objections, a personal hearing, and a reasoned order on merits.

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Issues: Whether the order reversing input tax credit under Section 19(5)(a) of the Tamil Nadu Value Added Tax Act, 2006 could be sustained when it was passed without proper reference to the earlier notices and objections and without affording an effective opportunity of hearing.

Analysis: The dealer had received earlier notices proposing reversal of input tax credit and had submitted detailed objections, specifically seeking a personal hearing. The impugned order was passed without dealing with those objections, without referring to the earlier proceedings, and without giving the promised opportunity of hearing. Such a course was held to be contrary to the procedure required under the Act and violative of the principles of natural justice, especially when the authority changed and the record had to be examined before deciding the issue afresh.

Conclusion: The impugned order was unsustainable and was set aside, with the matter remanded for fresh consideration after issuing comprehensive notice, receiving objections, granting personal hearing, and passing a reasoned order on merits.

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