Tax demand raised despite taxpayer's reply to SCN, prompting natural justice challenge; adjudication and rectification rejection set aside, remanded.

The dominant issue was whether the adjudication suffered from breach of natural justice due to non-consideration of the taxpayer's reply to the SCN. The HC found that the reply had been submitted (by email and later uploaded on the portal), yet the demand was raised in a mechanical manner without addressing the reply, indicating denial of an effective opportunity of hearing; consequently, the adjudication order was set aside and the matter was remanded to the adjudicating authority for fresh consideration. Since the foundational order was vitiated, the subsequent rectification rejection was also set aside, and the writ petition was disposed of on remand.

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ISSUES PRESENTED AND CONSIDERED

1) Whether the adjudication order confirming tax, interest, penalty and fee was vitiated for infraction of principles of natural justice on account of non-consideration of the petitioner's reply to the show cause notice and consequent mechanical confirmation of demand.

2) Whether the rejection of the rectification application was sustainable when the foundational grievance was that the reply to the show cause notice had not been considered.

3) What consequential relief ought to be granted, including remand directions, opportunity to file a fresh reply, grant of personal hearing, and portal access for effective participation in adjudication.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Natural justice-non-consideration of reply and mechanical adjudication

Legal framework: The Court applied the principles of natural justice, particularly the requirement of a meaningful opportunity to be heard and due consideration of the taxpayer's reply before confirming a demand.

Interpretation and reasoning: The Court noted the petitioner's specific assertion that a reply to the show cause notice had been submitted (including by email and later uploaded on the portal), but the adjudication order recorded that no reply was filed. The Court found that the reply "appears to have not been considered" and that the demand was raised in a "mechanical manner," demonstrating denial of a proper opportunity to present the defence.

Conclusion: The adjudication order suffered from a clear infraction of natural justice and could not be sustained; the matter warranted remand for fresh consideration after receiving and considering the reply and granting a personal hearing.

Issue 2: Sustainability of rectification rejection

Legal framework: The Court assessed the rectification rejection through the lens of procedural fairness, in light of the claimed non-consideration of the reply to the show cause notice.

Interpretation and reasoning: Since the Court accepted that the reply had not been considered in the original adjudication, it further held that the rectification application was also dismissed "without considering the said reply," thereby perpetuating the same procedural defect.

Conclusion: The rectification order was unsustainable and was set aside along with the adjudication order.

Issue 3: Appropriate relief and directions on remand

Legal framework: The Court exercised writ jurisdiction to set aside defective orders and to structure a fair rehearing process, ensuring effective access to the adjudicatory mechanism.

Interpretation and reasoning: Having found denial of a proper opportunity, the Court directed remand to the adjudicating authority for fresh decision-making. It mandated: (i) time to file a fresh reply to the show cause notice; (ii) issuance of a notice for personal hearing upon filing of the reply; (iii) due consideration of the reply and personal hearing submissions; (iv) passing of a fresh reasoned order; and (v) restoration of access to the GST portal within one week to enable uploading of reply and access to notices and documents.

Conclusion: The impugned adjudication order and rectification order were set aside; the matter was remanded with specific procedural safeguards to ensure a fair adjudication process.

Clarification affecting scope of final decision: Although the petition included a challenge to the validity of certain notifications, the Court left the issue of validity open and directed that any fresh adjudication order would remain subject to the outcome of the pending decision of the Supreme Court on that question.

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