Natural justice in transitional credit disputes leads to conditional setting aside and fresh hearing under GST.

A dispute over reversal of transitional CENVAT credit turned on whether the taxpayer had been given a proper opportunity to contest the GST demand. The Madras HC noted the taxpayer's claim that the demand was raised without meaningful hearing, while the revenue pointed to the show-cause and hearing notices and argued that natural justice had been followed. The Court emphasised the need to afford a response opportunity, while also noting the taxpayer's duty to monitor the GST portal. It conditionally set aside the impugned order, required part payment of the disputed demand, and directed fresh consideration with a personal hearing.

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Issues: Whether the impugned order reversing transitional credit could be sustained when the petitioner was not afforded a proper opportunity of hearing.

Analysis: The petitioner asserted that the transitional cenvat credit had been carried into the GST regime and that the demand was raised without a meaningful opportunity to contest it. The respondent relied on the show cause notice and subsequent hearing notices to contend that natural justice had been complied with. The Court found that the petitioner ought to be given an opportunity to respond, while also noting the petitioner's obligation to monitor the GST portal. To balance the equities, the Court directed payment of a portion of the disputed demand as a condition for reopening the matter.

Conclusion: The impugned order was set aside conditionally, and the petitioner was permitted to file a reply and receive a fresh consideration with a personal hearing.

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