Natural justice in tax adjudication requires a reasonable hearing; ex parte service tax demand was quashed and remanded.

A service tax demand confirmed without affording a reasonable opportunity of hearing was set aside, as the record indicated that the petitioner had not effectively been brought into the proceedings and the order was passed ex parte. The High Court held that, even where the show cause notice and personal hearing notices had not evoked a response, a demand could not be sustained without compliance with natural justice. The impugned order was quashed and the matter remanded for fresh consideration, with liberty to file a reply and a direction to grant a reasonable opportunity, including personal hearing, before passing a new order.

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Issues: Whether the service tax demand order, passed without according a reasonable opportunity of hearing, warranted interference and remand.

Analysis: The petitioner alleged that proceedings were not effectively brought to her notice and that the impugned order had been passed ex parte. The record also indicated that the show cause notice was not replied to and that personal hearing notices had not elicited a response. Even so, the Court found that a tax demand had been confirmed against a small-scale business without the petitioner having been heard, and that this justified interference.

Conclusion: The impugned order was quashed and the matter was remanded for reconsideration, with liberty to file a reply and a direction to grant a reasonable opportunity, including personal hearing, before passing a fresh order.

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