2021 (12) TMI 180 - HC - Central Excise

Clandestine manufacture - petitioner sought the inspection of the relied upon documents and the statements as well as those statements which had not been relied upon by the department - seeking cross-examination of witnesses - principles of natural justice - HELD THAT - The Courts have thus upheld the rights of cross examination and any denial of the opportunity on that count has been held to be in violation of the principle of natural justice. It is the right of the defence/litigating parties to ask for the examination of defence witnesses who could be from any pool which can include those witnesses whose statements have been recorded and not relied upon by the Department while prosecuting the person. In the instant case, the statements have been recorded of many of the witnesses and some of whom have not been examined as they have not been relied upon in the show cause notice. Surely from the said pool, the defence can make a request for examination of witnesses as defence witnesses and that simply cannot be denied by the authority. We are not in agreement with the respondent department when it disputes that basic proposition that the statements of prosecution witnesses which have not been relied upon and if the request comes forth for those witnesses to be examined as the defence witnesses, the same shall need to be allowed, subject to statutory provision of Section 128 as it is always to be left to the parties concerned in adjudicatory process as to whom they need to be brought as the defence witnesses. Here some of the witnesses are those whose statements were recorded before the show cause notice had been issued and for the reasons suited best to the respondents, quite a few of them were not included in the show cause notice. It would be always the right of the party against whom the show cause notice is issued to call them as defence witnesses as it is the right given to the party which faces the adjudication proceedings. The Court needed to take a note of the fact that the order-in-original came to be passed despite the specific assurance given by the then learned Standing Counsel. It is also reflected in the order-in-original. We had directed the affidavit to be filed however, that has not come on record. We have chosen not to stretch this issue, but, the then learned Standing Counsel was expected to guide the officer concerned dispassionately and as otherwise needed as Court Officer. The order-in-original is passed in complete disregard to the adjournment sought by the respondent and assurance given to the Court even while urgency was made. Remand the matter back to the authority who passed the order-in-original to hear it from the stage where it was when they approached this Court. Let the petitioner cooperate. The matter to be completed in twelve (12) weeks time from the date of receipt of copy of this order - Petition allowed by way of remand.

Summary

Issues Involved:
1. Denial of cross-examination of witnesses whose statements were recorded but not relied upon.
2. Violation of the principles of natural justice.
3. Right to call and examine defense witnesses.
4. Validity of the order passed by the Commissioner of Central GST and Service Tax.
5. Adjudication proceedings during the pendency of the petition.

Issue-wise Detailed Analysis:

1. Denial of Cross-Examination of Witnesses:
The petitioner challenged the order dated 28.08.2019 by the Commissioner of Central GST and Service Tax, Vadodara-II, which denied the request for cross-examination of witnesses whose statements were recorded but not relied upon. The petitioner argued that the order was a non-speaking one and violated the principle of natural justice. The court highlighted that it is the right of the defense to call for the examination of witnesses, including those whose statements were recorded but not relied upon by the department.

2. Violation of Principles of Natural Justice:
The court emphasized that denying the opportunity for cross-examination constitutes a breach of natural justice. The defense should be allowed to cross-examine witnesses to rebut allegations. The court cited several judgments supporting the right to cross-examination as an integral part of natural justice, including the Supreme Court's decision in Ayaaubkhan Noorkhan Pathan v. State of Maharashtra, which held that the right to cross-examine is essential for a fair trial.

3. Right to Call and Examine Defense Witnesses:
The petitioner argued that it is their prerogative to decide whom to examine as defense witnesses. The court agreed, stating that the defense has the right to summon witnesses whose statements were recorded but not relied upon by the prosecution. The court cited various judgments, including M.S. Naina vs. Collector of Customs, which held that the defense has the right to summon necessary witnesses for their case.

4. Validity of the Commissioner's Order:
The court found the Commissioner's order denying the cross-examination request to be untenable. The order was brief and lacked genuine reasons for denial. The court held that the defense's request to cross-examine witnesses whose statements were not relied upon should be allowed, as it is part of their right to a fair trial.

5. Adjudication Proceedings During Pendency of Petition:
The court noted with dismay that the adjudication proceedings continued despite the assurance given by the respondent's counsel to the court. The order-in-original was passed in complete disregard of the court's directions. The court quashed the order-in-original and remanded the matter back to the authority for a fresh hearing, ensuring the principles of natural justice are upheld.

Conclusion:
The court quashed the impugned order and the order-in-original, directing the authority to allow the petitioner to cross-examine the witnesses and to conduct a fresh hearing in compliance with the principles of natural justice. The matter was remanded back to the authority to be completed within twelve weeks from the date of receipt of the court's order.