Natural justice in tax assessment: order set aside and matter remitted for fresh adjudication after an opportunity to contest the mismatch.

An assessment confirmed on the basis of GST return and income-tax return discrepancies may be set aside where the assessee was not given a meaningful opportunity to respond to the show cause notice. The Madras HC held that the petitioner should nevertheless be allowed to explain the mismatch and contest the demand on merits, subject to equitable conditions. The impugned order was set aside on condition that the petitioner remit 10% of the disputed tax demand, file a reply to the notice, and receive a reasonable opportunity, including personal hearing, before a fresh order is passed.

---

---

Issues: Whether the assessment order was liable to be set aside for breach of principles of natural justice, and whether the assessee should be given an opportunity to contest the demand on merits.

Analysis: The order was based on discrepancies noticed between the GST returns and the income-tax return, and the record indicated that the assessee had not replied to the show cause notice. The Court found that the petitioner should nevertheless be given an opportunity to explain the discrepancy and contest the demand on merits, but only on terms.

Conclusion: The impugned order was set aside subject to the petitioner remitting 10% of the disputed tax demand, filing a reply to the show cause notice, and being granted a reasonable opportunity including personal hearing before a fresh order is passed.

Final Conclusion: The matter was restored for fresh adjudication on compliance with the conditions imposed, with interim closure of the connected miscellaneous petitions.

Ratio Decidendi: Where an assessment is confirmed without a meaningful opportunity to respond to the notice, the order may be set aside and the matter remitted for fresh consideration subject to equitable conditions.

---