TaxTMI 
TaxTMI 
2021 (12) TMI 241
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..... He, however, made a categorical statement that the said letter ought not to be treated as his reply to the show-cause notice. Referring to the statements of witnesses (recorded prior to the issuance of the show-cause notice) based whereon the show-cause notice came to be issued, the petitioner called upon the Commissioner to produce such witnesses for being cross-examined by him. This course of action, according to the petitioner, flowed from the statutory mandate contained in section 9D of the Act. While so asking the Commissioner, the petitioner referred to another show-cause notice dated 25th September, 2020 which was answerable to the Deputy Commissioner of CGST, Division IV, Kolhapur Commissionerate and requested that both notices be adjudicated together. 3. The Commissioner, by a letter dated 13th July, 2021, responded by stating that the petitioner not having replied to the show-cause notice, his request for cross-examination of the witnesses, at that stage, was premature. It was also stated that as and when the petitioner files his reply, his request for cross-examination of the witnesses would be examined in the light of the facts and circumstances of the case. 4. ....
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....y material that the party may have to rebut the prima facie opinion, even if, the assessee fails to reply to the show cause notice, that, does not amount to an 'admission' of the contents of the show cause notice in the absence of any statutory provision and it is always open to an assessee to cross-examine the witnesses whose statements are relied upon or sought to be examined on behalf of the Revenue. At the stage of show notice, there is no adjudication. It is only a step in the process of adjudication. The show cause notice by itself is not an order of assessment. The order of assessment will be passed, only after considering the evidence and the material, which is placed before the quasi judicial authority/tribunal. Therefore, as the show cause notice is based on prima facie material and constitutes a prima facie opinion, that does not result into an order of adjudication. The question, therefore, of an assessee being entitled, to cross-examination, even before the adjudication has commenced, in our opinion, surely would not arise. It is only after the adjudication proceedings have commenced pursuant to the show cause notice and if the Revenue seeks to reply (sic, rel....
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....e scope, effect and import of section 9D of the Act, the Division Bench laid down the law as follows: - 16. Clearly, therefore, the stage of relevance, in adjudication proceedings, of the statement, recorded before a Gazetted Central Excise officer during inquiry or investigation, would arise only after the statement is admitted in evidence in accordance with the procedure prescribed in clause (b) of Section 9D(1). The rigour of this procedure is exempted only in a case in which one or more of the handicaps referred to in clause (a) of Section 9D(1) of the Act would apply. In view of this express stipulation in the Act, it is not open to any adjudicating authority to straightaway rely on the statement recorded during investigation/inquiry before the Gazetted Central Excise officer, unless and until he can legitimately invoke clause (a) of Section 9D(1). In all other cases, if he wants to rely on the said statement as relevant, for proving the truth of the contents thereof, he has to first admit the statement in evidence in accordance with clause (b) of Section 9D(1). For this, he has to summon the person who had made the statement, examine him as witness before him in the ....
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....s to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assessee to seek permission to cross-examine the persons who have made the said statements, should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent No.2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decisions of the Hon'ble Supreme Court in Arya Abhushan Bhandar v. U.O.I., 2002 (143) E.L.T. 25 (S.C.) and Swadeshi Polytex v. Collector, 2000 (122) E.L.T. 641 (S.C.)." (emphasis supplied) 10. We share the views expressed by the Allahabad High Court and the High Court of Punjab and Haryana. 11. Section 9D of the Act, which is the sheet anchor the petitioner's claim, reads as follows: "9D. Relevancy of statement....
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..../or failure to reply to a show-cause notice may not, in all cases, amount to an admission of the allegations. In the present case, such question of admission does not arise because the petitioner in his reply dated 23rd October, 2020 has clearly denied and disputed the allegations levelled against him. The only question is at what stage would he be entitled to cross-examine the witnesses. As has been held in G-Tech Industries (supra) as well as in Parmarth Iron Pvt. Ltd. (supra), it is only after the statements of witnesses are recorded by the relevant authority in course of adjudication of proceedings and such evidence is regarded as relevant that the noticee has the right to claim that he be extended the opportunity to cross-examine such witnesses so as to extend to him fair, reasonable and adequate opportunity of defence. 13. In such view of the matter, we dispose of this writ petition with the following order: - (a) the petitioner is granted liberty to file a final reply to the show-cause-cum-demand notice dated 24th September, 2020 within a fortnight from date; (b) after the reply is received, the relevant authority shall decide whether to carry forward th....