Paper Trade Links Vs Union of India
Date: July 9, 2025
Subject Matter
Order set aside for failure to provide an opportunity for cross-examination
Summary
In the case, the petitioner contested a demand order relating to tax liability and penalty issued under the CGST Act, primarily arguing that their right to cross-examine witnesses, whose statements were used against them, was denied. The adjudicating authority had rejected the request for cross-examination, attributing the denial to delays caused by the petitioner and asserting that the evidence submitted was valid. The court, however, upheld the principles of natural justice, emphasizing the importance of the right to cross-examine witnesses, which is corroborated by previous Supreme Court judgments, particularly the case of Ayaaubkhan Noorkhan Pathan v. State of Maharashtra. The court found that the adjudicating authority failed to provide an opportunity for cross-examination, which is a fundamental aspect of fair legal proceedings. Consequently, the court set aside the impugned order and remanded the matter back to the adjudicating authority, instructing them to allow the petitioner a fair chance to cross-examine the witnesses. The Writ Petition was ultimately disposed of with the emphasis on adherence to the principles of natural justice during the proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
The petitioner has filed the present petition challenging the order dated 16.01.2023 passed by respondent No.3 whereby the tax liability as well as penalty has been imposed under the provisions of CGST Act, inter alia on the ground that the petitioner was not given any opportunity of cross-examination to the witnesses whose statements were relied in CGST Act.
2. The learned Authority has rejected the prayer for cross-examination only on the ground that they caused the delay in proceedings as well as they have made a statement after understanding the provisions of Section 70 of the CGST Act & their statements appears to be correct.
3. Shri Prasad, learned counsel appearing on behalf of the respondents No. 3 & 4 submits that this order is appealable, therefore, the present petition is not maintainable and the petitioner/assessee did not explain the reason for cross-examining the witnesses. Both the reasons are not acceptable. When the order suffers from principle of natural justice, then the Writ Petition is maintainable. The right of cross-examination is provided under the Evidence Act. Every witness who either give oral statement or give affidavit are always subjected to cross-examination as held by the Apex Court in the case of Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra and Ors. reported in AIR 2010 SC 58. The Apex Court has held that the cross-examination is one part of the principles of natural justice. Relevant paras 23, 42 & 46 are as under:-
“23. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice. (See also: Union of India v.T.R. Varma, AIR 1957 SC 882; Meenglas Tea Estate v. Workmen, AIR 1963 SC 1719; M/s. Kesoram Cotton Mills Ltd. v. Gangadhar & Ors., AIR 1964 SC 708; New India Assurance Company Ltd . v . Nusli Neville Wadia and Anr., AIR 2008 SC 876; Rachpal Singh & Ors. v. Gurmit Singh & Ors., AIR 2009 SC 2448; Biecco Lawrie & Anr. v. State of West Bengal & Anr., AIR 2010 SC 142; and State of Uttar Pradesh v. Saroj Kumar Sinha, AIR 2010 SC 3131).
42. In pursuance of the said order, the original record was produced. However, the learned counsel remained unable to point out from the original record, any proceeding or event, by way of which, it could be ascertained that the appellant was in fact, given an opportunity to cross-examine the witnesses, or to show that all the said witnesses were examined in the presence of the appellant. Further, he was also unable to satisfy this Court, with respect to the circumstances under which, the applications filed by the appellant on 28.2.2012, including the one to recall witnesses and permit him to cross-examine them, have been kept pending, without passing any order in relation to either one of them.
46. In view of the above discussion and considering the seriousness of the allegations, as the Scrutiny Committee has already conducted an inquiry in relation to this matter, the only grievance of the appellant is that there has been non compliance with the principles of natural justice, and the fact that the applications filed by him, were not decided upon, we direct that before the submission of any report by the Scrutiny Committee, his application for calling the witnesses for cross-examination must be disposed of, and appellant must be given a fair opportunity to cross-examine the witnesses, who have been examined before the Committee. We further direct the Scrutiny Committee to pass appropriate orders in accordance with the law thereafter. In case, the Scrutiny Committee has already taken a decision, the same being violative of the principles of natural justice, would stand vitiated.”
4. In view of the aforesaid, the impugned order is set aside. The matter is remanded back to the authority to proceed further at the stage of cross-examination. Accordingly, the Writ Petition is disposed of.