2025 (3) TMI 542 - HC - GST

GST adjudication order under Section 74 upheld despite claims of denied hearing and cross-examination rights

LGW Industries Limited Versus Assistant Commissioner of Revenue, State Tax & Ors.

The Calcutta HC dismissed a writ petition challenging a GST adjudication order passed under Section 74 without hearing opportunity and denial of ... Violation of principles of natural justice - adjudication order was passed without giving an opportunity of hearing - prayer for cross-examination, to those whose statements have been relied upon while passing the adjudication order - HELD THAT:- An order passed under Section 74 of the GST Act is appealable under Section 107A of the said Act. The above Section categorically states that there is a statutory mechanism for redressal enabling the aggrieved party to challenge the reassessment order before an appropriate appellate authority. This Court underlines that this statutory provision ensures that the petitioner has a clear and adequate remedy available for his grievance. This Court further holds that when a specific remedy is available, it is a well settled principle of law that the High Court’s writ jurisdiction cannot be ordinarily invoked unless under exceptional circumstances. In the present case, as the petitioner could not demonstrate any exceptional circumstances and has adequate relief by way of preferring an appeal under Section 107 of the GST Act and there arises no need for judicial intervention through a writ petition at this stage. Conclusion - The petitioner was afforded adequate opportunities to present their case and respond to the allegations. The denial of cross-examination did not constitute a breach of natural justice. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:(i) Whether the adjudication order was passed without giving the petitioner an opportunity of hearing.(ii) Whether the adjudication order was passed without granting the petitioner the opportunity to file written notes of reply.(iii) Whether the petitioner was denied the right to cross-examine witnesses whose statements were relied upon in the adjudication order, thus violating principles of natural justice.ISSUE-WISE DETAILED ANALYSISIssue (i): Opportunity of Hearing- Relevant legal framework and precedents: The adjudication process under the WBGST Act, 2017 requires adherence to principles of natural justice, which typically include the right to a fair hearing.- Court's interpretation and reasoning: The Court noted that the petitioner was informed of the findings and observations through personal hearings and communications before the issuance of the show cause notice. The petitioner was given an opportunity to respond but failed to provide contrary evidence.- Key evidence and findings: The petitioner requested an extension for the hearing due to the unavailability of their advocate, which was granted, indicating that opportunities for hearing were provided.- Application of law to facts: The Court found that the petitioner was given adequate opportunities to present their case, thus fulfilling the requirement of natural justice.Issue (ii): Opportunity to File Written Notes of Reply- Relevant legal framework and precedents: Section 74 of the WBGST Act, 2017 outlines the procedure for adjudication, including the opportunity to file replies to show cause notices.- Court's interpretation and reasoning: The petitioner submitted a reply requesting an extension, which was granted. However, the reply did not address the issues raised in the show cause notice substantively.- Key evidence and findings: The petitioner's reply focused on procedural issues rather than substantive defense against the allegations.- Application of law to facts: The Court concluded that the petitioner had the opportunity to file a reply and any failure to address the substantive issues was not due to a lack of opportunity.Issue (iii): Right to Cross-Examine Witnesses- Relevant legal framework and precedents: The principles of natural justice may include the right to cross-examine witnesses, but this is not absolute. The Supreme Court in Kanungo & Company vs Collector Of Customs ruled that cross-examination is not required in every case.- Court's interpretation and reasoning: The Court referenced the Supreme Court's decision, emphasizing that cross-examination is not a requisite part of natural justice in all adjudication processes.- Key evidence and findings: The adjudication relied on documentary evidence and statements obtained under summons, which were corroborated by other evidence. The petitioner did not provide evidence to counter these findings.- Application of law to facts: The Court held that the denial of cross-examination did not breach natural justice as the petitioner was informed of the evidence and had the opportunity to respond.SIGNIFICANT HOLDINGS- Preserve verbatim quotes of crucial legal reasoning: 'The principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities.'- Core principles established: The judgment reinforces the principle that procedural fairness does not always necessitate cross-examination, especially when other forms of evidence and opportunities for response are provided.- Final determinations on each issue: The Court determined that the petitioner was afforded adequate opportunities to present their case and respond to the allegations. The denial of cross-examination did not constitute a breach of natural justice. The writ petition was dismissed, but the petitioner was allowed to pursue an appeal under Section 107 of the GST Act.