Reasonable opportunity to defend refund claim required; hurried rejection set aside and fresh decision permitted after reply.

An order rejecting a refund application was quashed because it was passed without granting a reasonable opportunity to reply to the show-cause notice and file supporting documents. The petitioner had sought additional time immediately after receiving the notice to collect relevant records, but the authority acted within four days. The Court held that, although the authority could allow or refuse more time, that discretion had to be exercised fairly and with due regard to an effective defence. The petitioner was given two weeks to submit a reply with documents, and the Department was permitted to pass a fresh order thereafter.

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Issues: Whether the order rejecting the refund application was liable to be quashed for having been passed without granting a reasonable opportunity to reply to the show-cause notice and to file supporting documents.

Analysis: The petitioner sought additional time immediately after receipt of the show-cause notice so that relevant documents could be collected and a reply could be submitted. The Department passed the impugned order within four days, and the Court found that such haste was unwarranted in the facts of the case. Although the authority had discretion to grant or refuse further time, that discretion ought to have been exercised fairly and with due regard to the petitioner's request for an effective opportunity of defence.

Conclusion: The impugned order was quashed and the petitioner was granted two weeks to file a reply with relevant documents, after which the Department was permitted to pass a fresh order on the refund application.

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