Best judgment assessment under GST section 74 impermissible absent express statutory power; denial of cross-examination caused no prejudice.

Denial of cross-examination of the person who retrieved electronic data did not vitiate the assessment because the data was obtained in the assessees' presence, certified by them, and no specific prejudice was shown. In contrast, best judgment assessment could not be imported into proceedings under section 74 of the CGST Act, 2017, because such power is expressly provided only in sections 62 and 63 and cannot be implied where the statute does not authorise it. The court held that tax must be levied only by authority of law under article 265, found the extrapolated assessments without jurisdiction to that extent, and quashed them.

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Issues: (i) Whether refusal to permit cross-examination of the person who retrieved the electronic data vitiated the final assessment orders on the ground of violation of natural justice; (ii) Whether the proper officer could resort to best judgment assessment while proceeding under section 74 of the CGST Act, 2017.

Issue (i): Whether refusal to permit cross-examination of the person who retrieved the electronic data vitiated the final assessment orders on the ground of violation of natural justice.

Analysis: The request for cross-examination was directed against the author of the data retrieval report on which the assessment was substantially based. A litigant is not required to challenge every intermediate order separately, and a ground of natural justice can be raised against the final order if the earlier rejection was not tested on merits. The right to cross-examine is part of natural justice, but it is not automatic; the assessee must show a specific need and prejudice. On the facts, the data was retrieved in the assessees' presence, the process was certified by them, and their own statements admitted that the data had been entered by them. The request was therefore too broad and no prejudice was shown.

Conclusion: The refusal to permit cross-examination did not vitiate the assessment orders, and this issue is decided against the assessees.

Issue (ii): Whether the proper officer could resort to best judgment assessment while proceeding under section 74 of the CGST Act, 2017.

Analysis: Best judgment assessment is expressly provided only in the statutory settings covered by sections 62 and 63 of the CGST Act, 2017, with the corresponding rule. Section 74 does not confer any such power. The omission is treated as deliberate, and in tax matters the assessing authority cannot travel beyond the method authorised by statute. Levy and collection of tax must be by authority of law under article 265 of the Constitution of India, and an implied best judgment power cannot be read into section 74. Rule 31 was irrelevant to the issue. The impugned assessments were therefore made without jurisdiction to the extent they proceeded on extrapolation and best judgment.

Conclusion: The proper officer could not resort to best judgment assessment under section 74 of the CGST Act, 2017, and this issue is decided in favour of the assessees.

Final Conclusion: The assessments founded on best judgment extrapolation under section 74 were unsustainable and were quashed, with the writ petitions consequently allowed.

Ratio Decidendi: In the absence of an express statutory provision, a taxing authority cannot adopt best judgment assessment or extrapolation while acting under a provision that only authorises determination on the material available under the statute; denial of cross-examination causes no vitiation unless prejudice is shown.

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