Assessee precluded from cross-examining officers issuing summons and arrest-memo, when adjudication is based solely on documentary evidence

The Hon’ble Gujarat High Court in Sazid Ali Khan Versus Office Of Principal Commissioner, Central GST And Central Excise Commissionerate, Vadodara-I & Ors. - 2025 (7) TMI 1514 - GUJARAT HIGH COURTheld that the assessee was precluded from cross-examining officers issuing summons and arrest memos, and dismissed the writ petition challenging the order denying cross-examination.

Facts:

Sazid Ali Khan (“the Petitioner”), proprietor of M/s. KSEG India International, engaged in scrap business for two decades, and registered under GST Act after the introduction of GST.

Office of the Principal Commissioner, Central GST and Central Excise, Vadodara-I (“the Respondent”), who initiated proceedings against the Petitioner based on information of alleged fraudulent ITC passing, leading to investigation and enforcement actions.

The case originated from information received via a letter dated October 4, 2018, from the Joint Commissioner (Preventive), CGST, Ahmedabad South, indicating that M/s. S.K. Enterprise, Ahmedabad, was issuing fake invoices and passing on GST credits without actual movement of goods, which was being passed to the Petitioner’s firm. Based on this, a search was conducted on January 11, 2019, at the Petitioner’s premises, during which documents like purchase invoices and ledger accounts were seized.

Further investigation revealed that the Petitioner also availed ITC based on invoices issued by three bogus firms—M/s. Shivay Enterprise, M/s. Avi Enterprise, and M/s. Parshwnath Engineering—without receipt of goods. The Petitioner’s statement was recorded on March 26, 2019, where he refused to peruse vehicle verification reports downloaded from the Vahan website, claiming the reports did not concern him, though he accepted that heavy cargo like scraps could not be transported in small vehicles like three-wheelers, scooters, or motorcycles.

The Petitioner was arrested on March 30, 2019, and released on bail after depositing Rs. 35 lakhs.

Summons dated August 14, 2019, was issued to the Petitioner to produce relevant documents such as invoices, Lorry Receipts, and E-Way Bills for the period July 2017 to March 2019. The Petitioner responded that the documents were lost during transit, and the police had been informed accordingly. Despite this, the authorities continued their investigation.

The Petitioner sought to cross-examine five persons, four of whom were departmental officers involved in issuing summons and arrest memos, and a fifth being a co-noticee.

The Respondent relied on the judgment of Supreme Court in M/s Telestar Travels Pvt. Ltd. & Ors. Versus Special Director of Enforcement - 2013 (2) TMI 396 - Supreme Court, which states that investigation and adjudication are based on documents, and no prejudice would be caused if cross-examination is denied.

The Petitioner approached the Court via a writ petition under Article 227 of the Constitution of India, seeking to quash the order refusing cross-examination, alleging violation of principles of natural justice.

Issue:

Whether the Petitioner can be permitted to cross-examine officers who issued summons and arrest memos during the investigation proceedings under GST law?

Held:

The Hon’ble Gujarat High Court in Sazid Ali Khan Versus Office Of Principal Commissioner, Central GST And Central Excise Commissionerate, Vadodara-I & Ors. - 2025 (7) TMI 1514 - GUJARAT HIGH COURTheld as under:

• Observed that, out of the five persons to be examined as witnesses, four belong to the Department who have either issued the summons or arrest memo and therefore, such persons are not required to be cross-examined by the petitioner.
• Noted that, regarding the fifth person, who was a co-noticee, the opportunity for cross-examination was already granted and not attended to by the Petitioner.
• Further relied upon the Supreme Court judgment in M/s Telestar Travels Pvt. Ltd. & Ors. Versus Special Director of Enforcement - 2013 (2) TMI 396 - Supreme Courtand observed that the entire investigation and adjudication has been carried out based on documents and therefore no prejudice would be caused to the Petitioner if the opportunity for cross-examination is turned down.
• Held that, the availability of an alternative remedy under Section 107 of the GST Act, and appeal proceedings are nothing but a continuation of the original proceedings, thus affirming that the Petitioner could raise such submissions during the statutory appeal. Consequently, the Court dismissed the writ petition, upholding the order denying cross-examination.

Our Comments:

In M/s Bharti Palace Versus Commissioner of Central Goods Service Tax, Customs and Central Excise GST, Jabalpur (M.P.) - 2024 (10) TMI 505 - CESTAT NEW DELHI, the Tribunal emphasized that where the Department relies upon statements recorded during investigation, the assessee must be granted an opportunity to cross-examine such witnesses, as mandated under Section 9D of the Central Excise Act, 1944 (applicable to Service Tax matters). It was held that denial of this right renders the proceedings invalid due to breach of principles of natural justice.

However, the present case stands on a different factual footing. Here, the impugned order was solely on documents relied upon by the Department, which were made available to the assessee. In the absence of any reliance on oral testimony, the question of cross-examination did not arise. The Court, therefore, rightly held that non-grant of cross-examination in such circumstances did not violate Section 9D or principles of natural justice.

The Delhi High Court in the case of M/s. Vallabh Textiles Versus Additional Commissioner Central Tax Gst, Delhi East And Ors. - 2025 (4) TMI 1154 - DELHI HIGH COURT, has also held that cross-examination is not an absolute or unfettered right and it may be legitimately denied where the case is based purely on undisputed documentary evidence and where no prejudice is demonstrated to have been caused to the assessee.

Relevant Provisions:

Section 144 of Bharatiya Sakshya Adhiniyam, 2023 (Section 139 of The Indian Evidence Act, 1872)

“144. Cross-examination of person called to produce a document.

A person summoned to produce a document does not become a witness by the mere fact that he produces it, and cannot be cross-examined unless and until he is called as a witness.”

 (Author can be reached at [email protected])