Natural justice in tax adjudication: order confirming interest and penalty set aside for fresh consideration after hearing.

An assessment order confirming interest and penalty may be set aside where the authority does not properly consider the material on record and the assessee's objections, as this violates natural justice. On the facts noted, the disputed input tax credit had already been reversed and part of the interest demand had been paid, so the matter was remitted for one further opportunity to file objections. The impugned order was treated as a show cause notice, and the authority was directed to consider the objections and pass fresh orders after a reasonable hearing; failing compliance, the original assessment order would stand restored.

---

---

Issues: Whether the assessment order confirming levy of interest and penalty was liable to be set aside for violation of principles of natural justice and non-consideration of the material placed on record, and whether the assessee should be afforded a further opportunity to file objections.

Analysis: The petition challenged the order on the limited ground that it did not apply its mind to the material on record before confirming interest and penalty. It was noticed that the disputed input tax credit had already been reversed and that a part of the interest demand had also been paid. In these circumstances, the matter warranted one further opportunity to the assessee to place objections before the authority.

Conclusion: The impugned order was set aside and treated as a show cause notice, with liberty to the assessee to file objections within four weeks. The authority was directed to consider the objections and pass fresh orders after granting a reasonable opportunity of hearing; failing compliance, the assessment order would stand restored.

Final Conclusion: The writ petition was disposed of by restoring the matter to the adjudicating authority for fresh consideration after notice and hearing, thereby granting limited relief to the assessee.

Ratio Decidendi: An order confirming tax liability and penalty without adequate consideration of the assessee's objections and relevant material may be set aside to secure compliance with natural justice and to permit fresh adjudication after hearing.

---