Reasonable opportunity of hearing required before confirming tax demand; assessment set aside for fresh consideration.

An assessment order was set aside because the taxpayer had not been given an effective opportunity to contest the demand before confirmation. Although the order was sustained on the basis that no reply had been filed to the show cause notice, the record showed that the matter was decided without a proper hearing. The court held that the dispute required reconsideration, particularly in light of the claim that eligible input tax credit had been taken. It directed fresh consideration after receipt of the reply, compliance with the condition imposed, and grant of a personal hearing.

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Issues: Whether the assessment order deserved to be set aside for want of a reasonable opportunity to contest the tax demand.

Analysis: The impugned assessment was confirmed because no reply was filed to the show cause notice, but the record showed that the dispute was decided without affording an effective hearing before confirmation of the tax proposal. The petitioner asserted that eligible input tax credit had been claimed, and the matter called for reconsideration in the interest of justice. The Court therefore set aside the assessment order and directed reconsideration after receipt of the petitioner's reply, payment of the condition imposed, and grant of a personal hearing.

Conclusion: The assessment order was set aside and the matter was directed to be reconsidered after giving the petitioner a reasonable opportunity of hearing.

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