TaxTMI 
TaxTMI 
03 Sep 2026 
The Calcutta High Court on 16/07/2026 passed an order which may have far reaching consequences. The story goes like this. One of the taxpayers was issued with a show cause notice imposing huge penalties both under CGST as well as WBGST. The SCN was promptly replied with a request for cross examination of two third parties as the case required that cross examination. Despite this OIO was passed on 19/03/2026 even without affording the personal hearing as required under section 75 (4) in gross violation of natural justice. This OIO was followed by a reminder notice dated 29/06/2026. Aggrieved by this, the taxpayer approached the jurisdictional high court by way of writ petition (Appellate side) number 16100 of 2026.
As the fact that there was no personal hearing opportunity granted to taxpayer was apparent on records, the counsel for respondent could not oppose the matter being remanded to the original authority. The best part of this case is the high court has observed the request for cross examination in the reply to SCN and categorically ruled that such opportunity must be provided before passing the order. It is the general practice being followed by tax officials to refuse the opportunity of cross examination as a matter of routine. This case is an eye opener for all such tax officials as the court has held that cross examination is required, wherever the same is requested and the third party is connected with the case. The relevant portion reads as " 12 (c) The respondent No. 5 shall specifically afford the petitioner an opportunity to cross examine Dipak Kumar Daiya and Barun Kumar Jha and shall permit the petitioner to file a fresh reply thereafter".
The High Court has also stated in operative portion that the respondent No. 5 shall complete the entire exercise and pass a reasoned and speaking order in accordance with law on or before 30th September 2026. The decision so arrived at shall be communicated to the petitioner forthwith.
Key take aways: Hats off to all concerned in making the GSTAT operational and bringing in to the stage of scrutiny as well as final disposal in selected cases. The developments that took place during July and August 2026 in GSTAT are tremendous which gives us hope that by the beginning of the new year 2027, GST litigation may come down drastically as the officers passing the adjudication orders shall be having decisions on identical issues passed by several benches of GSTAT which are binding on them. Slowly, the writs reaching High Courts may come down significantly. But even in August 2026, writs are entertained in deserving cases.
Normally, in a majority of disputed cases, there may not be any requirements for cross examination in general. However, there are exceptional cases where the adjudication order is passed based on inputs/ information/ detail furnished by such third parties. Hence in all such cases, when the taxpayer insists on cross examination, the same is required to be granted in line with principles of natural justice. This is more so in all cases where ITC is denied under section 16 (2) (c) based on supplier registration being cancelled on a later date after the transactions. Even the Supreme Court has held that ITC is to be denied if and only if the supplier has not paid GST to the Government, which fact is not known to the receiver. Hence, in all applicable cases the taxpayer must insist on the requirement for cross examination.
There is exactly an identical case in another writ before the same high court where the high court has ruled that
a. The impugned order dated 19.03.2026 along with all consequential notices and orders including the reminder dated 29.06.2026 is hereby set aside. The matter is remanded to respondent No. 5 for fresh consideration in accordance with law.
b. The respondent No. 5 shall fix a date for personal hearing and shall provide with copies of all relevant documents.
c. The respondent No. 5 shall specifically afford the petitioner an opportunity to cross examine Dipak Kumar Daiya and Barun Kumar Jha and shall permit the petitioner to file a fresh reply thereafter.
d. the The petitioner is directed to cooperate with proceeding and shall not seek any unnecessary adjournment.
e. The respondent No. 5 shall complete the entire exercise and pass a reasoned and speaking order in accordance with law on or before 31st October, 2026. The decision so arrived at shall be communicated to the petitioner forthwith.
Case reference: Raju Sharma Versus Assistant Commissioner of State Tax, Bureau of Investigation & Ors. - 2026 (9) TMI 163 - CALCUTTA HIGH COURT.
The purpose is that each and every taxpayer as well as tax officials become aware of these decisions of the High Courts so that the quality of adjudication improves and the litigation comes down.
Conclusion: Taxpayers as well as tax professionals are advised to go through both the judgements of the High court in full and take advantages to an optimum extent in all the applicable cases. In case the principles of natural justice is followed by adjudication authorities in letter as well as sprit, in future we shall be getting qualitative adjudication orders.