TaxTMI 
TaxTMI 
2025 (9) TMI 1339
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....(s) or any other relief as this Hon'ble Court deems it fit and proper in the facts and circumstances of the case in the interest of justice and equity." 2. The brief facts giving rise to the present petition are as under:- The petitioner - JSW Steel Ltd., entered into an Memorandum of Understanding (MoU) with M/s. Larsen & Turbo Ltd., (L & T) for supply of various products viz., reinforcement bars, plates, steels, round bars etc., under two financing schemes i.e., MRPA and non-MRPA. As per the MoU, based on the annual lifting done by LoP for certain prescribed products, L & T would be entitled to Turn Over Discounts (TOD) and under the MRPS scheme, L & T was eligible for credit period of 120 days from the date of Invoices with interest free credit period of 60 days, interest of 30 days inbuilt in the price and interest of balance 30 days to be adjusted against equivalent TOD. On 15.12.2022, the respondents initiated investigation against the petitioner and summons were issued to both representatives of the petitioner as well as representatives of L & T interalia alleging that the petitioner was engaged in evasion of GST by adopting different methods / modus operandi in its da....
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.... etc., aggrieved by which, petitioner is before this Court by way of the present petition. 3. Heard learned Senior counsel for the petitioner and learned counsel for the respondents - revenue and perused the material on record. 4. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior counsel for the petitioner submitted that the 1st respondent committed an error in refusing to permit the petitioner to cross-examine the representatives of the L & T whose statement had been recorded by the respondents. It was submitted that it was very crucial and important to permit the petitioner to examine / cross-examine the L & T representatives especially when their statements were relied upon by the 1st respondent for the purpose of rejecting the claim of the petitioner by passing the impugned order and as such, it is necessary that the impugned order be set aside and the matter be remitted back to the 1st respondent for reconsideration afresh in accordance with law by permitting the petitioner to examine / cross-examine the said L & T representatives and to proceed further in accordance with law. In support of hi....
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....untarily given. Despite multiple opportunities given to M/s. JSW, they have not submitted the details of TOD paid/payable to M/s. L&T. Therefore, I don't find any necessity of Cross-Examination of L&T representative in this case, In this regard, I reply on the following judgments: The Hon'ble High Court of Telangana, in its judgment dated: 06.11.2020 in the case of Mr. Mohammed Muzzamil and Another vs. The CBIC in W.P. No. 18081 OF 2020, on the basis of several judgment of the Hon'ble Supreme court, has held as follows: " Thus, there is no doubt that where a plea of violation of principles of natural justice by denying a party an opportunity to cross examine witnesses is raised in proceedings under he Customs Act, 1962 or similar legislation, the question of prejudice suffered to such party by such denial has to be gone into. If there is no prejudice caused by such denial, no relief can be granted to him. From the contents of the Hon'ble Supreme Court's judgments referred to an relief upon in the said judgment of High Court, it may be seen that denial of opportunity for Cross Examinations has been upheld. Some of these judgment are given herein below; The....
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....nity to be provided to the petitioner to examine / cross-examine the L & T representatives in relation to their statements recorded by the respondents which were sought to be relied upon by the 1st respondent for the purpose of passing the impugned order; in other words, having undisputedly recorded the statement of not only the officials of the petitioner but also the L & T representatives in the backdrop of the subject matter of the impugned proceedings which relate to transactions between the petitioner and L & T, it was absolutely essential to provide an opportunity to the petitioner to examine / cross-examine the L&T officials whose statements were recorded by the respondents. Under these circumstances, denial of an opportunity in favour of the petitioner to cross-examine the L & T representatives tantamounts to not only violation of principles of natural justice but also deprival of the valuable right of cross-examination to the petitioner and also contrary to principles of justice, equity and fair play particularly when the said statement of the said L & T representatives were relied upon by the 1st respondent in the impugned order, thereby establishing that denial of an opp....
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....lea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the adjudicating authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject-matter of cross-examination. Therefore, it was not for the adjudicating authority to presuppose as to what could be the subject-matter of the cross-examination and make the remarks as mentioned above. We may also point out ....
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.... 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 adjudicating proceeding, and arrive at an opinion that, having regard to the circumstances of the case, the statement should be admitted in the interests of justice. 17. In fact, section 138 of the Indian Evidence Act, 1872, clearly sets out the sequence of evidence, in which evidence-in-chief has to precede Cross-Examination, and cross-examination has to precede re-examination. 18. It is only, therefore, (i) after the person whose statement has already been recorded before a Gazetted Central Excise Officer is examined as a witness before the adjudicating authority, and (ii) the adjudicating authority arrives at a conclusion, for reasons to be recorded in writing, that the statement deserves to be admitted in evidence, that the question of offering the witness to the assessee, for Cross-Examination, can arise. ....
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....of Mr. Varun Gupta, Mr. Suresh Rao and Mr. Avinash Baliga could be held to be valid?" 13. In para 10.1 of the impugned Order-in-Original dated 25th March, 2008 the Commissioner recorded the fact that cross-examination had been sought of Mr. Pavan Prabhu, Mr. Avinash Baliga, Mr. Suresh Rao and Mr. H.S. Sooryanarayana. Further cross-examination of Mr. Abhay Gupta had been asked for on the ground that his statement, although in his own handwriting, appeared to be dictated. Further, it was not corroborated by any documentary evidence. Cross-examination was also sought of the panch witnesses Mr. Shiv Kumar and Mr. Md. Anwar as well as of Mr. Rakesh Garg, IO, DGCEI, New Delhi. The above request was declined by the CCE by referring the decision in, Jetmal Pithaji v. Assistant Collector of Customs, Bombay - AIR 1974 SC 699 = (S.C.) followed in Jagdish Shankar Trivedi v. Commissioner of Customs -. Reference was also made to the decision in Surjeet Singh Chhabra v. Union of India - 1997 (89) E.L.T. 646 (S.C.) where it was held that, not allowing of cross-examination was not violative of principles of natural justice even if such confession was retracted within six days. Reference wa....
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....the case. It was accordingly held that the investigation conducted by the Department was not proper. 17. This Court has heard the submissions of Mr. Harpreet Singh, learned Senior Standing Counsel for the appellant and Mr. A.K. Prasad, learned counsel for the respondent. 18. The Court is required to examine if the impugned order of the CESTAT gives rise to any substantial question of law in this appeal under Section 35G of the CE Act. 19. It was submitted by Mr. Harpreet Singh, learned Senior Standing Counsel for the appellant that the retracted statements of the aforesaid persons might require corroboration but not in material particulars. According to him, as long as the material available on record provided a general corroboration of the retracted statements, that would be sufficient to sustain the SCNs issued to the respondent. Secondly, it was submitted that the retraction took place only when the cross-examination of the persons who gave statements in the course of investigation was denied and not earlier thereto. Therefore, the CCE was justified in ignoring such retraction. 20. On the other hand, Mr. A.K. Prasad, learned counsel appearing ....
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....ecember, 2015 in CEAC No. 62/2014 ( Commissioner of Central Excise, Delhi-1 v. Vishnu & Co. Pvt. Ltd.) [2016 (332) E.L.T. 793 (Del.)] upheld an the order of CESTAT that had set aside the adjudication order on the ground that it proceeded on the basis of the retracted statement of the persons who were not offered for cross-examination. It was observed in that case "where such statements are subsequently retracted or resiled from, it becomes necessary for the Department to produce other evidence which is of an independent nature which corroborates the retracted statements." In that case, the Commissioner had proceeded on the basis of the retracted statements of persons not offered for cross-examination. There again, it was contended by the department that the retraction made beyond 20 months after the initial statement, would have no effect in the eyes of law. The Court negated the above statements and held as under: "41. What the above submission overlooks is the 'reliability' of such statements. Once it is shown that the maker of such statement has in fact resiled from it, even if it is after a period of time, then it is no longer safe to rely upon it as a substant....
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....foresaid judgments in GST proceedings and held that it was necessary to provide an opportunity in favour of the petitioner wherein cross-examine the persons making alleged statements in order to test their veracity by holding as under:- "1. Petitioner is a registered taxpayer under the laws relating to Goods and Services Tax. He challenges an order imposing a penalty of more than Rs.9.40 Crores, under 122(1) of the Central Goods & Services Tax Act, 2017 (for short ' SGST ACT) apart from a further amount of Rs.9.40 Crores under section 122(1) of the State Goods & Services Tax Act, 2017 (for short 'SGST Act') and consequential interest and other penalties. Though an appeal is available to the petitioner under section 107 of the CGST/SGST Act, the jurisdiction under Article 226 of the Constitution of India has been invoked, alleging that the principles of natural justice have been violated while issuing the impugned order. 2. Petitioner is the proprietor of a plywood business by name 'M/s.Wood Tunes Enterprises'. As per Ext.P1 show cause notice, petitioner was called upon to explain why the penalty proposed therein ought not to be imposed for alle....
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.... was filed, requesting for cross-examination of the individuals who were named in the reply notice. After referring to various details it is stated that the request for Cross-Examination was only for the purpose of protracting the proceedings and there was no purpose in the said demand. 5. I have heard Sri. Jaikumar S. learned counsel for the petitioner and Sri. R. Harishankar, learned Standing Counsel for the respondents. 6. The only issue that requires consideration is whether the impugned order ought to be interfered with under Article 226 of the Constitution of India when the remedy of an appeal is available under section 107 of the Act. 7. On a reading of Section 107(11) of the Act, it is evident that the Appellate Authority does not possess the power to remand the case, if in case any anomaly is detected in the impugned order, or even when there is any violation of the principles of natural justice. The Appellate Authority can only confirm, modify or annul the order appealed against. The aforesaid provision has specifically curtailed the right of the appellate authority to remand the case. Hence, in cases of violation of principles of natural justic....
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....d. Without granting an opportunity to cross-examine the persons who gave statements against the petitioner, the impugned order was issued imposing huge penalties and other fines on the petitioner. 11. The Adjudicating Authority in the impugned order has mentioned that cross-examination is not required to be granted to the petitioner as the same will not in any way affect the bona fides of evidence collected in the form of statements of those witnesses already on record. After referring to various judgments and after making the observations, the Adjudicating Authority came to the conclusion that there was no merit in the demand for cross-examination. The following observations in the impugned order are relevant : "43.8 In the instant case, I find that in all the statements it has been specifically stated that they were being given voluntarily and the averments therein were true and correct. Any retraction in the future through cross examination or otherwise will fail due to the long delay, as has been consistently held by the various Courts in decisions on delayed retractions. Therefore, in my considered opinion any cross examination of these persons will not, in a....
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....ned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them." 14. In an earlier decision of the Supreme Court in State of Kerala. vs. K.T. Shaduli Yusuf Grocery Dealer 1977 taxmann.com 48 (SC)/ (1977) 2 SCC 777, while considering a question arising under the Kerala General Sales Tax Act, 1963 it was observed that even though the tax proceedings are quasi-judicial in nature and the Sales Tax authorities are not strictly bound by the rules of evidence, still, they are bound by the principles of natural justice. It was held that when circumstances clearly justify the g....
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....nnot under any circumstances be justified under the rule of law, even if the proceedings are quasi judicial in nature. 18. Considering the nature of the order issued against the petitioner which is impugned in this writ petition, this Court is of the view that failure to grant an opportunity to the petitioner for cross-examination and relying upon the statements of persons to impose penalty have violated the principles of natural justice. 19. The decisions referred to in the impugned order regarding the justification for not granting an opportunity for cross-examination are all cases where the facts justified such denial. In the instant case, the circumstances compel this Court to observe that an opportunity for cross-examination was a necessity. This Court is also compelled to observe that failure to grant an opportunity to cross-examine the person whose statements were relied upon is in effect delaying the whole proceeding. 20. In the result, the impugned order dated 29-05-2024 is set aside and the first respondent is directed to consider the matter afresh, after granting an opportunity for Cross-Examination of the persons whose statements had been take....
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....learned Single Judge went wrong in placing reliance on the decision of the Supreme Court in Andaman Timber Industries (supra), especially since the decision referred to above did not take into consideration a binding Three Judge Bench decision of the Supreme Court in Kanungo & Co. v. Collector of Customs [1983] 13 ELT 1486 (SC) and in Surjeet Singh Chhabra v. Union of India. It is the specific case of the appellants that there is no requirement in law to grant an opportunity to cross-examine witnesses. 5. Heard Sri. R. Harishankar, the learned counsel appearing for the appellants, and Sri. S. Jaikumar, the learned counsel appearing for the 1st respondent/writ petitioner. 6. Sri. R. Harishankar, the learned counsel appearing for the appellants, vehemently pointed out that there is no requirement to follow the principles of natural justice in an adjudication proceedings, especially when the Act does not contemplate such an opportunity. The writ petitioner cannot insist, as a matter of right, that he should be granted an opportunity to cross-examine the witnesses, whose statements were obtained by the proper officer. He reiterated that although the learned Single Jud....
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....r officer did not grant an opportunity to the petitioner to cross-examine the witnesses, whose statements were relied on by him. Therefore, we find that the writ petition was perfectly maintainable despite the existence of an alternative remedy. 11. The appellants, however, maintain that it is not the requirement of law to provide an opportunity to cross-examine the witnesses, whose statements were recorded by the proper officer under Section 74 of the CGST Act. We thus are called upon to judge whether it is a requirement of law that in proceedings under Section 74 of the CGST Act, the proper officer has to grant an opportunity of cross-examination to the assessee, if requested. 12. Section 74 of the CGST Act prescribes the procedure for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts. Once the proper officer forms an opinion that a notice has to be issued to the assessee, he must serve a notice under sub-Section (3) of Section 74 of the CGST Act containing the details of tax not paid or short paid or erroneously refunded or inp....
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....st him. It was therefore imperative for the proper officer to have granted the opportunity of cross-examination to the petitioner. 15. As regards the contention of the appellants that it is not the requirement of law to provide an opportunity to cross-examine the witnesses since it is not an integral part of the principles of natural justice, we cannot but disagree with the stand of the appellants. It is now settled law that in every quasi-judicial proceedings, the rule of natural justice has to be followed. The rule of natural justice is the tenet of every adjudication proceedings, a violation of which renders the proceedings void. When courts are called upon to decide the validity of quasi-judicial proceedings on the ground of violation of principles of natural justice, it cannot shut its eyes and adopt a pedantic approach and hold that unless the said principle is specifically extended under plenary legislation or the rules framed under it, the insistence of the principles is not mandatory. 16. In Krishnadatt Awasthy v. State of M.P. [2025 SCC Online 179], a three Judge Bench of the Supreme Court considered the question as to whether in the absence of any rule ....
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....rovisions. 21. In Kothari Filaments v. Commissioner of Customs (Port) [(2009) 2 SCC 192], the Supreme Court held that the provisions of the Customs Act, 1962 do not specifically exclude the principles of natural justice and the denial of opportunity to cross-examine the witnesses whose statements were relied on by the authorities while passing the order of confiscation, renders the proceedings invalid. 22. In Aureliano Fernandes v. State of Goa [(2024) 1 SCC 632], the Supreme Court held that extension of the principles of natural justice is not an empty incantation. It forms the very bedrock of Article 14 and any violation of these principles tantamounts to violation of Article 14 of the Constitution. Paragraph Nos.35, 36, 37 and 38 are extracted hereunder: "G. Article 14: Bedrock of the principles of natural justice 35. Principles of natural justice that are reflected in Article 311, are not an empty incantation. They form the very bedrock of Article 14 and any violation of these principles tantamounts to a violation of Article 14 of the Constitution. Denial of the principles of natural justice to a public servant can invalidate a decision taken....
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....not turn a blind eye toward the civil consequences arising out of those orders impugned. Therefore, the assessee was fully justified in making a request for cross-examination of the witnesses whose statement formed the basis of the impugned order and non extension of such an opportunity erodes the efficacy of the order and thus renders it nugatory. 24. Having said so, we must hasten to add that the right to cross-examine does not extend in respect of all witnesses. During the consideration of the appeal, we found that while issuing notices and passing final orders under Section 74 of the CGST Act, certain persons were arrayed as co-noticees. The plea of the writ petitioner to seek Cross-Examination of the co-noticees cannot be accepted as such. At best, the writ petitioner can only request the proper officer to serve copies of the replies submitted by the co-noticees to the notices received by them. 25. In conclusion, we find that the stand of the appellants that the principles of natural justice need not be followed during an adjudication under the provisions of the CGST Act is clearly untenable. In the light of the principles expounded by the Supreme Court in Tu....