Cross examination of persons whose statements relied upon by the department, Goods and Services Tax - GST

[Ashwani Lau]

How to reject the plea of the Noticees for cross examination of the witnesses/ persons whose statements relied upon by the department.

Relevant judgements to support the denial of cross examination by the Adjudication Authority.

Posts / Replies

[KASTURI SETHI]

Dear Sir,

Pl. let me know the issue in brief. However, one case law is posted here.

KIN-SHIP SERVICES (INDIA) PVT. LTD. Versus UNION OF INDIA - 2020 (3) TMI 378 - KARNATAKA HIGH COURT

 

[KASTURI SETHI]

PARAGON STEELS (P) LTD. Versus COMMISSIONER OF C. EX., CUS. & S.T., CALICUT - 2017 (12) TMI 766 - CESTAT BANGALORE

 

[KASTURI SETHI]

AVANA SURGICAL SYSTEMS PVT. LTD. Versus PRINCIPAL COMMISSIONER OF CUSTOMS, AIR CARGO, CHENNAI - 2024 (1) TMI 102 - MADRAS HIGH COURT

 

[KASTURI SETHI]

Dear Sir,

Here is the judgement of Supreme Court in favour of the department :-

Adjudication — Cross-examination of co-noticees not necessary when accused absconding, avoiding summons and not availing opportunity of personal hearing before adjudicating authority and such co-noticees also not retracted their statements

The Supreme Court Bench comprising Hon’ble Mr. Justice Uday Umesh Lalit, Hon’ble Mr. Justice S. Ravindra Bhat and Hon’ble Mr. Justice Pamidighantam Sri Narasimha on 25-4-2022 dismissed the Petition for Special Leave to Appeal (C) Nos. 7157-7158 of 2022 filed by Stalin Joseph against the Judgment and Order dated 4-3-2021 of Madras High Court in W.A. Nos. 360 & 363 of 2021 and C.M.P. Nos. 1435 & 1440 of 2021 as reported in (Stalin Joseph v. Commissioner) - 2021 (3) TMI 439 - MADRAS HIGH COURT. While dismissing the petition, the Supreme Court passed the following order :

“We see no reason to interfere. The Special Leave Petitions are dismissed.

Pending applications, if any, shall stand disposed of.”

The Madras High Court in its impugned order had held that since the accused-importer involved in misdeclaration and undervaluation of imported goods was absconding, avoiding summons and not availing opportunity of personal hearing before the adjudicating authority, his request for cross-examination of the co-noticees is to be considered as merely a ploy to scuttle and delay the adjudication process and hence rightly not entertained by the adjudicating authority particularly when it had clearly been brought out in the adjudication order that he had impersonated himself, opened bank account in the name of a fictitious person, remitted Customs duty by effecting cash payment in dummy accounts but failed to counter such allegation by producing evidence in his favour. Moreover, the statements rendered by the co-noticees under Section 108 of Customs Act, 1962 were not retracted. The plea of mala fide exercise of power by the Departmental officers was also held to be not acceptable when neither their names were specified nor they were made party to the Writ Petition before the High Court.

[Stalin Joseph v. Commissioner - 2022 (381) E.L.T. A37 (S.C.)]

[Sadanand Bulbule]

Dear Sir

Despite divergent interpretations on the issue of "cross-examination", I have not come across any adjudicating authority extending such an opportunity to the taxpayers. Although there is no specific provision under the GST Act to this effect [other than mandatory personal hearing], there is nothing to lose if it is generously provided to the aggrieved party. It may pave the path for complete justice to the deserving one, either to the taxpayer or the tax authority. Truth is on the right side of facts. Why to be afraid of disowning it?

[Sadanand Bulbule]

Dear Sir

In my opinion, facilitating cross-examination is not less than an accomplishment on the part of the adjudicating authority and it proves potential for more accomplishment, if not personal but very strong legal connotations indeed--to get the best results.

[Alkesh Jani]

Shri,

Here are few observations of legal forums, which may be of your help.

(i) In ARUN GUPTA Versus COMMISSIONER OF CUSTOMS (EXPORT), MUMBAI, 2010 (260) E.L.T. 449 (Tri. – Mumbai) it was held that “denial of cross examination of co-noticees did not cause any violation of natural justice. Cross-examination of co-noticees were sought by Noticee only during personal hearing and no effort to produce them though they were known to noticee. Co-noticees statements were recorded against noticee during investigation and it remained un-retracted”.

(ii) In MAYA MAHAL INDUSTRIES Versus COLLECTOR OF CENTRAL EXCISE, MEERUT, 1995 (80) E.L.T. 118 (Tribunal), it was held that “summoning of co-noticee for giving notice was not proper. Cross-examination of co-noticee to be done only, if he wishes – Principles of natural justice not violated for not summoning co-noticee for cross-examination”.

(iii) In the case of Kanungo & Co. Vs. Collector of Customs, Calcutta & Others [1993(13) E.L.T. 1486 (S.C.)], wherein it was held that for proceedings under Customs Act, the right to compliance to the principles of natural justice does not cover the right to cross examination witnesses.

Relevant Para 12 is reproduced wherein the Hon’ble Supreme Court observed as follows –

“In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly, I hold that there is no force in the third contention of the appellant.”

(iv) In the case of Suman Silk Mills Pvt. Ltd. Vs. Commissioner of Customs & C.Ex., Baroda [2002 (142) E.L.T. 640 (Tri.-Mumbai)], Tribunal observed Para 17 that-

“Natural Justice – Cross-examination – Confessional statements – No infraction of principles of natural justice where witnesses not cross-examined when statements admitting evasion were confessional.”

(v) In the case of Commissioner of Customs, Hyderabad V. Tallaja Impex reported in 2012(279) ELT 433 (Tri.), it was held that-

“In a quasi-judicial proceeding, strict rules of evidence need not to be followed. Cross examination cannot be claimed as a matter of right.”

(vi) In the case of Patel Engg. Ltd. vs UOI reported in 2014 (307) ELT 862 (Bom.) Hon’ble Bombay High Court has held that;

“Adjudication – Cross-examination – Denial of- held does not amount to violation of principles of natural justice in every case, instead it depends on particular facts and circumstances – Thus, right of cross-examination cannot be asserted in all inquiries and which rule or principle of natural justice must be followed depends upon several factors – Further, even if cross-examination is denied, by such denial alone, it cannot be concluded that principles of natural justice had been violated.” [para 23]

(vii) Hon’ble Tribunal in its decision in Sridhar Paints v/s Commissioner of Central Excise, Hyderabad reported as 2006(198) ELT 514 (Tri-Bang) has held that:

“……………. denial of cross-examination of witnesses/officers is not a violation of the principles of natural justice, we find that the Adjudicating Auth has reached his conclusions not only on the basis of the statements of the concerned persons but also the various incriminating records seized. We hold that the statements have been corroborated by the records seized” (Para 9)

(viii) in case of A.L Jalauddin v/s Enforcement Director reported as 2010(261) ELT 84 (Mad HC) the Hon High court held that ;

“…. Therefore, we do not agree that the principles of natural justice have been violated by not allowing the appellant to cross-examine these two persons. We may refer to the paragraph in AIR 1972 SC 2136 = 1983 (13) E.L.T. 1486 (S.C.) (Kanungo & Co. v. Collector, Customs, Calcutta)”

(ix) in case of Surjit Singh Chhabra vs Union of India reported at 1997 (89) ELT 646 (SC) is applicable in the instant case, it is held that cross-examination of witness is not necessarily required to be allowed.

(x) in case of Mulchand M. Zaveri Vs. Union of India 2016 (4) TMI 1074 Gujarat High Court held that the stand of the petitioner that the cross examination must be allowed before the petitioner even filed final reply to Show Cause Notice cannot be accepted.

Thanks