Show cause notice must disclose the exact grounds for tax demand; adjudication beyond notice violates natural justice.

A tax demand cannot be sustained where the show cause notice fails to disclose the factual basis or the alleged contravention, and the adjudicating authority relies on grounds not set out in that notice. Here, the notice quantified duty but did not mention Rule 191BB or the specific breach later used to confirm demand, so the adjudication was held to have travelled beyond the notice and violated natural justice. The original and appellate orders were set aside, and the matter was remanded for fresh de novo adjudication without any decision on duty liability.

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Issues: Whether the demand could be sustained when the show cause notice did not set out the grounds or allege violation of Rule 191BB, and whether the adjudication order travelled beyond the notice, requiring remand.

Analysis: The show cause notice merely quantified the demand under Rule 9(2) read with Section 11A but did not disclose the factual basis or the alleged contravention on which duty was sought to be demanded. Rule 191BB was not mentioned in the notice or any annexure, yet the adjudicating authority confirmed demand by resting its findings on alleged breaches of that very rule and related conditions. Since the foundation for the demand was absent from the notice, the adjudication was held to have exceeded the scope of the notice and to have violated natural justice.

Conclusion: The demand could not be sustained on the existing adjudication and the matter was required to be remanded to the original authority for fresh consideration in accordance with law.

Final Conclusion: The impugned appellate and original orders were set aside and the dispute was sent back for de novo adjudication without any decision on the merits of duty liability.

Ratio Decidendi: An adjudication in tax matters cannot be sustained where it is founded on grounds not disclosed in the show cause notice, and such a breach of notice-based natural justice warrants remand for fresh decision.

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