Statutory hearing before adverse tax adjudication is mandatory; breach can invalidate the order and justify remand.

When an adverse tax adjudication is proposed, the statutory requirement of a hearing under section 75(4) must be honoured; failure to afford that opportunity can vitiate the final order. Here, although notices had been served and earlier enquiry steps had occurred, the record showed that the Proper Officer contemplated an adverse order without granting the mandated hearing. The High Court therefore set aside the adjudication order and remanded the matter for fresh consideration, with directions to provide an opportunity of hearing and to respond to the show-cause notice. The remand was made conditional on deposit of the directed amount.

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Issues: Whether the adjudication order under section 73 was liable to be set aside for breach of the obligation to afford a hearing under section 75(4), and whether the matter should be remanded for fresh adjudication.

Analysis: The petitioners were served with a pre-show-cause notice, a show-cause notice and a further notice, but the record also showed that the Proper Officer contemplated an adverse order without affording an opportunity of hearing as required by section 75(4). The prior enquiry under section 67 and the petitioners' non-response to the notices were noted, but those aspects did not cure the absence of a hearing when the final order was passed. Taking an overall view, the defect in procedure warranted interference, though the petitioners' conduct justified putting them to terms before the matter was sent back.

Conclusion: The impugned adjudication order was set aside and the matter was remanded to the Proper Officer for fresh consideration after granting an opportunity of hearing and an opportunity to respond to the show-cause notice, subject to deposit of the directed amount.

Final Conclusion: The writ petition succeeded to the extent of procedural relief and fresh adjudication, but the petitioners were required to comply with the imposed condition before the remand would operate.

Ratio Decidendi: Where an adverse tax adjudication is contemplated, the statutory requirement of a hearing must be complied with, and failure to do so can justify setting aside the order and remanding the matter for de novo consideration.

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