Natural justice and remand compliance require fresh hearing before redetermining duty; demand quashed and matter remitted.

A demand raised without complying with an appellate remand direction was unsustainable, because the authority was required to reconsider duty liability after extending the claimed exemption benefit and only then redetermine the tax. The High Court also found a breach of natural justice, since no opportunity of hearing was given before the demand was issued. The impugned demand was quashed and the matter was remitted for fresh determination after a fresh show cause notice and hearing to the petitioner.

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Issues: Whether the demand order was sustainable when the remand direction of the appellate authority had not been complied with and no opportunity was given to the petitioner before redetermination of duty.

Analysis: The appellate authority had already directed the Assistant Collector to reconsider the duty liability after extending the benefit claimed under the exemption notification. Instead of first redetermining the liability in accordance with that direction and after hearing the petitioner, the impugned demand was issued. The Court held that such action was contrary to the remand order and also offended the principles of natural justice, since the petitioner had not been afforded an opportunity before the demand was raised.

Conclusion: The impugned demand was quashed, and the matter was sent back for fresh determination after issuing a fresh show cause notice and granting the petitioner an opportunity of hearing.

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