Ultra vires challenge to capacity determination rules led to remand for fresh adjudication of the levy.

The adjudicating authority decided the matter on facts without examining the appellant's legal objection that Rule 3 of the capacity determination rules was ultra vires and that the levy provisions could not sustain the demand. Because the core legal challenge and the authorities cited on both sides were not considered at first instance, the matter required reconsideration. The impugned order was set aside and the appeals were remanded for fresh adjudication after deciding the validity of the rule and the applicability of the levy provisions.

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Issues: Whether the impugned order should be set aside and the matter remanded for fresh consideration because the legal challenge to the validity of the rule and the applicable levy provisions had not been examined by the adjudicating authority.

Analysis: The adjudicating authority had proceeded on facts without considering the appellant's legal objection that Rule 3 of the capacity determination rules was ultra vires and that the demand could not survive on that basis. Since the legal issue and the authorities cited on both sides had not been examined at the first instance, the matter required reconsideration by the adjudicating authority.

Conclusion: The impugned order was set aside and the appeals were remanded to the adjudicating authority for a fresh order after considering the legal issue raised.

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