The Madhya Pradesh High Court at Indore set aside an order imposing tax liability and penalty under the CGST Act against Paper Trade Links, holding that the petitioner had been denied the opportunity to cross-examine key witnesses constituting a violation of principles of natural justice.
Pursuant to a search proceedings conducted against an assessee, the CGST department recorded statements on oath of certain witnesses – including employees and dealers of the assessee – under section 70 of the CGST Act, holding the same as being true and complete. The assessee made specific and repeated requests for cross examination of such witnesses, which were denied by the adjudicating authority citing such requests as being an afterthought to cause delay in adjudication. The resultant assessment order was assailed before the High Court under Article 226 of the Constitution- primarily on the grounds of violation of natural justice.
The Revenue opposed the petition, citing availability of alternate remedy of appeal; and that any requests for cross-examination of witnesses was required to be supplemented with ‘reasons’ for making such requests.
The Division Bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi observed that the adjudicating authority had rejected the petitioner’s request for cross-examination solely on the grounds of alleged delay and the self-incriminating nature of the witness statements under Section 70 of the CGST Act. The Court found this reasoning legally unsustainable.
Citing the Supreme Court’s authoritative ruling in Ayaaubkhan Noorkhan Pathan v. State of Maharashtra, AIR 2010 SC 58, the Bench reiterated that cross-examination is an essential component of natural justice and is protected under the Indian Evidence Act. The Court clarified that writ jurisdiction is maintainable when such procedural safeguards are violated, even if alternative remedies exist.
Accordingly, the impugned CGST order was quashed, and the matter was remanded to the adjudicating authority to resume proceedings from the stage of cross-examination, thereby ensuring the petitioner’s right to a fair hearing.
Appearances:
Petitioner: Adv. Piyush Parashar
Revenue: Adv. Prasanna Prasad.
