Natural justice in tax adjudication leads to remand where the taxpayer was not heard before the demand order.

The HC quashed the assessment order and remanded the matter for fresh adjudication because the petitioner had not replied to the show cause notice or participated in the proceedings, and was therefore not given a meaningful opportunity to contest the tax demand. The court noted that the dispute over availment of input tax credit on the BMW car could not be properly established at that stage on the materials then available. Fresh consideration was ordered after granting an opportunity to file a reply and be heard, subject to the petitioner remitting 10% of the disputed tax demand within the stipulated time.

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Issues: Whether the impugned order deserved to be quashed and the matter remanded for fresh consideration on the ground that the petitioner had not been afforded a reasonable opportunity to contest the tax demand.

Analysis: The petitioner had not replied to the show cause notice or participated in the proceedings leading to the impugned order. On the materials placed, the dispute regarding availment of input tax credit in respect of the BMW car could not be properly established by the petitioner at that stage. In the interests of justice, and since the petitioner sought an to contest the demand, the matter warranted reconsideration after granting an opportunity to file a reply and to be heard.

Conclusion: The impugned order was quashed and the matter was remanded to the respondent for fresh adjudication, subject to the petitioner remitting 10% of the disputed tax demand and filing a reply within the stipulated time.

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