Show cause notice service and natural justice are essential; absence of effective notice can vitiate adjudication.

An adjudication based on a show cause notice cannot be sustained where the record does not show effective service on the assessee, because denial of notice and opportunity to respond violates natural justice and fair hearing; the order was therefore set aside to that extent and the matter restored for fresh consideration after reply. A separate objection that the notice was vague and issued without application of mind was not accepted, because that challenge was not substantiated and any jurisdictional defence could be examined in the fresh adjudication. The challenge to the contents of the notice was thus rejected.

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Issues: (i) Whether the show cause notice and consequential order could be interfered with for want of service and violation of natural justice. (ii) Whether the challenge to the show cause notice on the ground that it was vague and issued without application of mind was maintainable.

Issue (i): Whether the show cause notice and consequential order could be interfered with for want of service and violation of natural justice.

Analysis: The absence of material on record showing service of the show cause notice on the assessee meant that the adjudication proceeded without effective notice to the person affected. In such circumstances, the adjudicatory order could not be sustained, as denial of an opportunity to respond offended the basic requirement of fair hearing.

Conclusion: This issue was answered in favour of the assessee.

Issue (ii): Whether the challenge to the show cause notice on the ground that it was vague and issued without application of mind was maintainable.

Analysis: The Court found that the objection as to vagueness and absence of application of mind was not substantiated. The assessee was permitted to file a reply to the show cause notice, and any jurisdictional objection or defence could be examined by the assessing officer in the fresh adjudication.

Conclusion: This issue was answered against the assessee.

Final Conclusion: The impugned adjudication was set aside only to the extent necessary to restore the opportunity of reply and fresh consideration, while the separate challenge to the contents of the notice was rejected.

Ratio Decidendi: An adjudication based on a show cause notice cannot stand where service of the notice is not shown on record, but a mere allegation that the notice is vague will not vitiate it unless substantiated.

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