Natural justice in tax adjudication: mismatch-based demand set aside and remanded for fresh hearing with opportunity to file reply.

A tax demand based on mismatch between e-way bill data and Form GSTR-3B, with additional reliance on Form ITC-04, was found to require fuller factual explanation and consideration of supporting material. Because the earlier reply had not included all relevant documents and the show cause notice did not expressly address every basis later used in the demand, a further opportunity to respond was warranted. The impugned order was set aside and the matter remanded for fresh adjudication after a reasonable hearing, subject to a monetary deposit and liberty to file a fresh reply.

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Issues: Whether the impugned demand order was liable to be set aside for want of a complete opportunity to meet the basis of the tax proposal and for consideration of additional material, and whether the matter should be remanded with conditions.

Analysis: The notice was issued on a mismatch between the e-way bill data and the returns in Form GSTR 3B, and the assessee had replied that the mismatch arose because some e-way bills related to non-taxable supplies. However, the supporting documents were not filed with the earlier reply and were produced only later. The show cause notice did not specifically advert to the returns in Form ITC-04, though those returns formed part of the basis for the final demand. As the assessee had been put on notice of the broader mismatch, a further opportunity to submit a comprehensive explanation was warranted. The order was therefore set aside, subject to a monetary deposit, with liberty to file a fresh reply and with a fresh adjudication after reasonable hearing.

Conclusion: The impugned order was set aside and the matter was remanded for fresh consideration after payment of the stipulated amount and grant of a reasonable hearing.

Final Conclusion: The assessee obtained conditional relief, with the adjudication reopened for a de novo decision after compliance with the deposit condition.

Ratio Decidendi: Where the basis of a tax demand requires fuller factual explanation and relevant supporting material was not earlier considered, a fresh opportunity and remand may be ordered, subject to terms, to ensure compliance with natural justice.

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