Quashing of ex parte demand order: conditional deposit ordered, fresh personal hearing and reasoned decision required thereafter.

Quashing of an ex parte demand order was contested on grounds of breach of natural justice and limitation; the court accepted that a reply had been filed and that failure to attend personal hearing arose from adviser and staff defaults, and noted the petitioner's limitation plea. The court permitted conditional deposit of the challenged amount within four weeks; on deposit the petitioner must file written submissions and attend a personal hearing on the fixed date, whereupon the authority must pass a fresh reasoned order within four weeks. If adverse, the authority shall not apportion the deposited amount for two weeks from service of that order.

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Issues: Whether the ex-parte demand/DRC-07 order dated 03.08.2024 can be quashed or set aside and whether the petitioner is entitled to a hearing and reconsideration of the impugned order provided the impugned amount is deposited.

Analysis: The petition challenges the show cause notice dated 31.05.2024 and the ex-parte demand/DRC-07 order dated 03.08.2024 on grounds including absence of opportunity of personal hearing, limitation, and subsequent closure of liability. A maintainability objection based on availability of alternate remedy was noted. The petitioner undertook to deposit the entire amount stated in the impugned order within four weeks. In view of this undertaking, the respondent was directed to grant a personal hearing to the petitioner (with written notes of argument and reply) and thereafter to pass a reasoned order within four weeks of that hearing. Protective directions were given that, if the subsequent order is adverse to the petitioner, the deposited amount shall not be apportioned by the respondent for a period of two weeks from service of the order on the petitioner. The court expressly did not decide merits of the tax demand and left open the petitioner's right to prefer an appeal against any adverse order.

Conclusion: Petition allowed in terms of prayer (B): petitioner to deposit the entire impugned amount within four weeks; respondent to provide personal hearing on 30th March, 2026 and pass a reasoned order within four weeks thereafter; if the order is adverse, the amount shall not be apportioned for two weeks from service of the order; petitioner remains free to prefer appeal.

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