Natural justice in tax adjudication: orders quashed for ignoring the reply, no hearing, and mechanical decision-making.

Adjudication and rectification orders were set aside where the record showed that the reply to the show-cause notice was not properly considered and the request for personal hearing was ignored. The adjudication order wrongly proceeded as if no reply had been filed and no hearing had been sought, while the rectification order did not show that any hearing was granted before correction. The court treated these defects as mechanical adjudication, lack of independent application of mind, and breach of natural justice, and remanded the matter for fresh adjudication after giving reasonable opportunity of hearing.

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Issues: Whether the adjudication and rectification orders were liable to be quashed for breach of natural justice, non-consideration of the reply to the show-cause notice, and absence of a personal hearing.

Analysis: The record showed that the petitioner had indicated a desire for personal hearing in the reply to the show-cause notice, yet the adjudication order proceeded on the erroneous footing that no reply had been filed and no hearing was sought or granted. The rectification order acknowledged receipt of the reply but did not disclose that any personal hearing was afforded before correcting the order. In these circumstances, the orders reflected mechanical adjudication, absence of independent application of mind, and failure to deal with the explanation offered in reply. Such defects rendered the orders unsustainable.

Conclusion: The impugned orders were quashed and the matter was remanded for fresh adjudication after granting reasonable opportunity of hearing to the petitioner.

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