2024 (10) TMI 842 - AT - Customs

Authority denies documents and cross-examination rights under Section 138B, violating natural justice principles in tax proceedings

Shri Mehul Rasikbhai Bhimani, Shri Pramodgiri Premgiri Goswami Versus C.C. -Ahmedabad

CESTAT Ahmedabad set aside the impugned order due to gross violation of natural justice principles. The adjudicating authority failed to provide ... Violation of principles of natural justice - denial of an opportunity of personal hearing - levy of penalty - HELD THAT:- There is gross violation of principle of natural justice in passing the impugned order. It is found that despite the request made by the appellant, the relied documents have not been supplied to the appellants along with the show cause notice and only inspection was allowed which is not sufficient to enable the party to present their case effectively. The appellants vide their letter dated 20.10.2021 requested for relied upon documents however, no documents were supplied to them and without giving the documents the hearing was fixed and the impugned order was passed on 29.11.2021. This amounts to denial of opportunity of personal hearing. The adjudicating authority has rejected the request for cross- examination on a flimsy ground whereas Section 138B mandates that if the statements to be admitted as evidence cross-examination of the witnesses is must. Therefore, no discretion is provided under Section 138B for the adjudicating authority to use his whims to allow or to disallow the cross-examination. Therefore, the rejection of cross- examination by the adjudicating authority is absolutely contrary to the mandate given in Section 138B. The adjudicating authority has grossly violated the principles of natural justice by not providing the data/ relied upon documents and by not allowing the cross- examination of the witnesses as requested by the appellants - the impugned order will not sustain to the extent of the present appellants. The impugned order is set aside - appeal allowed by way of remand. Issues:1. Violation of principle of natural justice in passing the impugned order.Detailed Analysis:The appellants challenged the impugned order passed by the Principal Commissioner of Customs, confirming charges of smuggling gold and imposing penalties under the Customs Act, 1962. The appellant argued that the order was passed without compliance of natural justice, specifically regarding the lack of provision of relied-upon documents and denial of an opportunity for cross-examination. The appellant contended that the documents referred to in the show cause notice were not provided, and only inspection was allowed, which they argued was insufficient for effective presentation of their case. The appellant also highlighted that despite requesting the relied-upon documents, none were supplied, and the order was passed without granting a personal hearing, amounting to a denial of natural justice.The appellant further argued that the denial of cross-examination of key witnesses, whose statements were relied upon, was a violation of natural justice. The adjudicating authority had rejected the request for cross-examination on flimsy grounds, despite the mandatory requirement under Section 138B of the Customs Act for cross-examination when statements are to be admitted as evidence. The appellant cited various judgments to support their argument, emphasizing that the adjudicating authority's refusal to allow cross-examination was contrary to the legal mandate. The Tribunal concurred with the appellant's arguments, noting that the denial of cross-examination and failure to provide relied-upon documents violated the principles of natural justice.In light of the above, the Tribunal held that the impugned order could not be sustained concerning the appellants. The order was set aside, and the appeals were allowed by way of remand to the adjudicating authority for a fresh decision. The Tribunal emphasized the importance of providing all necessary documents and allowing cross-examination of witnesses for a fair adjudication process, stressing the significance of upholding principles of natural justice in such proceedings. The Tribunal directed the adjudicating authority to reconsider the case, ensuring compliance with the principles of natural justice and issuing a fresh and reasoned order in the interest of justice.