Natural justice in input tax credit disputes requires a reasoned order considering the reply; non-speaking orders are remanded.

An order denying input tax credit was set aside because it was non-speaking and did not deal with the petitioner's reply to the show cause notice. The High Court found that the adjudicating authority had merely stated that the reply was not in order and that credit was unavailable under the Act, without showing any application of mind to the defence raised. That failure to give reasons and consider the submissions amounted to a breach of natural justice, so the matter was remanded for fresh hearing and a reasoned decision on all submissions.

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Issues: Whether the impugned order denying input tax credit was liable to be quashed for being a non-speaking order passed without considering the petitioner's reply, and whether the matter required remand for fresh adjudication.

Analysis: The petitioner's reply to the show cause notice was on record, but the impugned order did not deal with the submissions raised therein and merely recorded a conclusion that the reply was not in order and the credit was not available under the Act. Such an order did not disclose reasons showing application of mind to the defence raised by the petitioner. The absence of consideration of the reply and the failure to pass a reasoned order amounted to a breach of natural justice and justified interference under writ jurisdiction.

Conclusion: The impugned order was quashed and set aside, and the matter was remanded for a fresh hearing and a reasoned order after considering all submissions of the petitioner.

Final Conclusion: The petitioner succeeded to the extent of getting the adverse order annulled and the dispute sent back for fresh decision on merits.

Ratio Decidendi: An order affecting civil or fiscal rights must show consideration of the reply and reasons reflecting application of mind; a non-speaking order passed without doing so is liable to be set aside and remanded for fresh adjudication.

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