Cross-examination in tax proceedings is not absolute; Madras HC directs taxpayers to statutory appeal in an ITC dispute.

In quasi-judicial tax proceedings, the right to cross-examination is not absolute, and a challenge based only on denial of cross-examination will not necessarily invalidate an assessment where the dispute can be tested through documentary evidence such as invoices, e-way bills and transport records. In a dispute over alleged fraudulent Input Tax Credit availment, the Madras HC found the objection to be predominantly factual and declined writ interference, holding that the petitioners should pursue the statutory appellate remedy. It directed that any appeal filed within the stated time be entertained and decided on merits, subject to compliance with pre-deposit requirements.

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Issues: Whether denial of cross-examination of a person whose statement was relied upon vitiated the assessment proceedings; and whether the writ petitioners should be relegated to the statutory appellate remedy.

Analysis: The challenge arose in the context of alleged fraudulent availment of Input Tax Credit and the resulting tax liability. The Court held that in quasi-judicial proceedings the right of cross-examination is not absolute, and that the alleged irregular availment of ITC could have been met by documentary proof such as invoices, e-way bills and transportation records. On that factual basis, the absence of cross-examination by itself did not render the proceedings invalid. As the dispute turned on factual questions, the Court found it appropriate to leave the petitioners to the statutory appellate forum.

Outcome: The Court declined to interfere in writ jurisdiction and directed the petitioners to pursue the statutory appeal, with a direction that an appeal filed within the stated time be received and decided on merits subject to pre-deposit compliance.

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