Refund rejection beyond show cause notice and without fresh hearing violates natural justice, leading to remand.

A refund rejection order cannot extend beyond the scope of the show cause notice; where the notice was confined to a specified disputed amount, rejection of the entire refund claim was unsustainable to that extent. The order was also vitiated because the deciding officer passed the final adjudication without granting a fresh hearing after transfer of the matter, despite the earlier hearing having been before a different officer. The High Court held that this breached natural justice and set aside the order, remitting the matter for fresh adjudication after giving the assessee an opportunity of hearing.

---

---

Issues: (i) whether the refund rejection order could sustain when it travelled beyond the scope of the show cause notice; (ii) whether the order was vitiated for breach of natural justice inasmuch as no fresh opportunity of hearing was granted before the deciding officer passed the impugned order.

Issue (i): whether the refund rejection order could sustain when it travelled beyond the scope of the show cause notice.

Analysis: The refund proceedings were initiated through a show cause notice limited to a specified disputed amount. The impugned order, however, rejected the entire refund claim instead of confining itself to the amount put to notice. An adjudicating authority cannot travel beyond the scope of the notice and impose a determination on a larger amount than what was proposed for rejection.

Conclusion: The impugned order was unsustainable to the extent it exceeded the show cause notice, in favour of the assessee.

Issue (ii): whether the order was vitiated for breach of natural justice inasmuch as no fresh opportunity of hearing was granted before the deciding officer passed the impugned order.

Analysis: The officer who ultimately passed the order had not granted a fresh hearing after the matter was transferred, despite the earlier hearing having been before a different officer. Since the decision adversely affected the petitioner, adherence to the basic requirement of hearing was necessary before final adjudication.

Conclusion: The order was vitiated by violation of natural justice and required interference, in favour of the assessee.

Final Conclusion: The refund rejection order was quashed and the matter was remitted for fresh adjudication after giving the petitioner an opportunity of hearing in accordance with law.

Ratio Decidendi: An adjudicating authority cannot reject a claim beyond the scope of the show cause notice, and any adverse order passed without granting the required hearing to the successor deciding officer is liable to be set aside for breach of natural justice.

---