Extending Opportunity Of Cross-Examination In Proceedings U/S 74(9) CGST Act An Integral Part Of Natural Justice Principles: Kerala High Court
The Kerala High Court dismissed a Writ Appeal of the Joint Commissioner, Central Tax and Central Excise, CGST Kochi against the Single Judge's Judgment.
The Kerala High Court held that extending an opportunity of cross-examination in the proceedings under Section 74(9) of the Central Goods and Services Tax Act, 2017 (CGST Act) is an integral part of the Principles of Natural Justice.
The Court held thus in a Writ Appeal filed by the Joint Commissioner, Central Tax and Central Excise, CGST Kochi and other authorities against the Judgment of the Single Judge in a Writ Petition.
A Division Bench of Justice A.K. Jayasankaran Nambiar and Justice Easwaran S. observed, “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 Tulsiram Patel (supra) and Krishnadatt Awasthy (supra), we hold that in appropriate cases, extending an opportunity of cross-examination in a proceedings under Section 74(9) of the CGST Act 2017 is an integral part of the principles of natural justice, a violation of which will render the proceedings void.”
Advocate R. Harishankar appeared on behalf of the Appellants while Advocate S. Jaikumar appeared on behalf of the Respondents.
Brief Facts
The Respondent was visited with proceedings under Section 74(9) of the CGST Act and was further visited with an Order imposing a tax and penalty of more than 9.40 Crores under the statutory provisions. Despite the availability of an alternate remedy, the Respondent approached the Writ Court alleging a serious infraction of the Principles of Natural Justice, insofar as there was a failure to accede to his request for cross-examination of persons whose statements were obtained during the enquiry and which were relied upon by the authority while passing the Order of penalty.
The Appellants contended before the Single Judge that under the scheme of the CGST Act, there is no mandate for granting permission to cross-examine the witnesses whose statements were obtained by the Proper Officer in the proceedings for imposition of tax. However, the Single Judge took the view that the principles of natural justice had been violated since the authorities had denied the right to cross-examine the persons, who had given statements against the Writ Petitioner. Hence, this was challenged before the Division Bench.
Reasoning
The High Court in the above context of the case, emphasised, “We must bear in mind that when judicial review of the order of a quasi-judicial authority is sought for, the court cannot turn a blind eye toward the civil consequences arising out of those orders impugned.”
The Court added that 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, therefore, non-extension of such an opportunity erodes the efficacy of the Order and renders it nugatory.
“… 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”, it further said.
Accordingly, the High Court dismissed the Appeal and declined to interfere with the Judgment of the Single Judge.
Cause Title- The Joint Commissioner & Ors. v. Nishad K.U. & Anr. (Neutral Citation: 2025:KER:13589)
