Fair hearing in tax adjudication can justify remand, with conditional payment, when input tax credit reversal is disputed.

Denial of an effective opportunity in tax adjudication justified interference where the taxpayer sought to explain that input tax credit had been availed net of credit notes issued by the supplier. The Madras HC set aside the impugned order and remitted the matter for fresh adjudication after a reply to the show cause notice, a reasonable opportunity and personal hearing. The relief was made conditional on the petitioner remitting 10% of the disputed tax demand. The ruling reflects that a fair hearing defect can vitiate the assessment order, while conditional remand may be used to balance procedural fairness with revenue protection.

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Issues: Whether the impugned order was liable to be set aside for denial of reasonable opportunity and whether the matter should be remitted on condition of payment of a portion of the disputed tax demand.

Analysis: The tax proposal arose from the alleged failure to reverse Input Tax Credit attributable to credit notes issued by the supplier. The petitioner sought an opportunity to explain that the credit was availed net of the value of such credit notes. In the circumstances, the denial of an effective opportunity warranted interference, but the relief was made conditional by directing payment of 10% of the disputed tax demand and permitting submission of a reply to the show cause notice, followed by a fresh adjudication after reasonable opportunity and personal hearing.

Conclusion: The impugned order was set aside and the matter was remitted, subject to the petitioner remitting 10% of the disputed tax demand and participating in the fresh adjudication.

Final Conclusion: The petitioner obtained partial relief, as the adverse order was annulled and the dispute was sent back for reconsideration on terms.

Ratio Decidendi: Where an assessee is shown to have been denied a fair opportunity in tax adjudication, the consequential order may be set aside and the matter remitted, with conditional safeguards where justified.

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