2026 (3) TMI 579 - HC - GST

Right to fair hearing: denial of timely disclosure and cross-examination requires remand for fresh inquiry.

Where departmental inquiry relied on documentary evidence and witness statements, those documents must be supplied in time for the affected party to make ... Non-supply of documents relied upon (RUD's) during inquiry with the show cause notice - opportunity to test evidence - Violation of principles of natural justice - right to fair hearing - denial of opportunity to cross-examine witnesses whose statements are relied upon. Violation of principles of natural justice by non-supply of relied-upon documents - HELD THAT:- The Court found that documents relied upon by the respondents were supplied to the petitioners only during the course of the inquiry and not along with the show cause notice, and that such failure to supply the relied-upon material before the inquiry constituted a breach of the principles of natural justice. For this reason the impugned order could not stand and the matter was remanded for fresh inquiry beginning from the stage of issuance of the show cause notice, subject to the direction that all documents relied upon shall be supplied to the petitioners along with a list of Relied Upon Documents (RUDs). [Paras 3, 5] Impugned order quashed and matter remanded for fresh inquiry; respondents directed to supply all relied-upon documents and a list of RUDs to the petitioners. Denial of opportunity to cross-examine witnesses whose statements are relied upon - HELD THAT:- The Court held that the respondents' failure to extend the requested opportunity for cross-examination of witnesses, statements of whom were relied upon, amounted to a denial of a fair opportunity of hearing. Consequently, the impugned order was set aside on this ground and the authority was directed, on remand, to afford the petitioners any requested opportunity to cross-examine such witnesses and thereafter pass appropriate orders in accordance with law within the period stipulated. [Paras 3, 5] Impugned order quashed on this ground and the matter remanded with directions to permit cross-examination where requested and to complete the inquiry in accordance with law. Final Conclusion: The writ petition was allowed: the impugned order was quashed on grounds of procedural unfairness (non-supply of relied-upon documents and denial of cross-examination), and the matter was remanded for a fresh inquiry from the stage of issuance of the show cause notice with directions to supply RUDs, permit cross-examination if requested, and complete the inquiry within three months. Issues: (i) Whether supplying documents relied upon by the department after issuance of the show cause notice and during inquiry violates the principles of natural justice; (ii) Whether refusal to allow cross-examination of witnesses whose statements are relied upon by the department violates the petitioners' right to a fair hearing and requires remand.Issue (i): Whether documents relied upon by the department, supplied to the petitioners only during the course of inquiry and not along with the show cause notice, amount to violation of principles of natural justice.Analysis: The petition record shows that documentary material on which the inquiry relied was not provided with the show cause notice but was furnished subsequently during the inquiry. This sequence deprived the petitioners of prior knowledge of the evidence relied upon against them and of a meaningful opportunity to respond before adverse action was taken. The lack of timely supply of relied upon documents impeded the petitioners' ability to prepare and present effective submissions at the pre-decisional stage.Conclusion: The delayed supply of documents relied upon by the department violated the principles of natural justice in favour of the petitioners.Issue (ii): Whether the refusal to permit cross-examination of witnesses whose statements were relied upon by the department contravened the petitioners' right to a fair hearing and warrants setting aside the impugned order and remanding for fresh inquiry.Analysis: The inquiry record indicates that statements of certain witnesses were acted upon without granting the petitioners the opportunity to seek and conduct cross-examination. Where adverse findings rest on witness statements, denying the affected party the opportunity to test that evidence undermines the fairness of the proceedings. Remedial relief in such circumstances includes permitting cross-examination and, if necessary, reopening the inquiry from the stage where the defect occurred to ensure compliance with fair hearing standards.Conclusion: The refusal to allow cross-examination of relied-upon witnesses violated the petitioners' right to a fair hearing and favours the petitioners.Final Conclusion: On the grounds of (i) non-supply of relied upon documents with the show cause notice and (ii) denial of opportunity for cross-examination of relied-upon witnesses, the impugned order is quashed and the matter is remanded to the respondent authority for a fresh inquiry from the stage of issuance of the show cause notice, with directions to supply all relied upon documents and to permit any requested cross-examination; the writ petition is allowed.Ratio Decidendi: Where a tax inquiry relies on documents or witness statements, those documents must be supplied in time for the affected party to respond and any request to cross-examine relied-upon witnesses must be permitted; failure to do so violates principles of natural justice and requires remand for fresh inquiry.