Always. But you're writing for the hundreds of future readers, not the one reviewer. A calm, specific, non-defensive reply ('here's what happened, here's what we did') routinely impresses prospects more than a wall of five-stars.
The format that works: acknowledge, state your side briefly and factually, take it offline ('call me directly'). Never argue details publicly, never get personal, never write angry. The reply outlives the dispute.
For plainly fake or policy-violating reviews, reply once for the record and report through GBP; removal is slow and uncertain, which is one more reason steady real reviews matter. They dilute anything unfair.