Saturday, August 24, 2013

Income tax case laws

ST-Adjudication order without disposing off the request for cross examination of witness is quashed

ST: In case of application by assessee for cross-examination of witnesses, adjudicating authority must first dispose of such application and, thereafter, proceed with adjudication in accordance with law
[2013] 34 232 (Gujarat)
Mahek Glazes (P.) Ltd.
Union of India*
APRIL  10, 2013 

Section Article 226 of the Constitution of India - Writ petition - Alternative remedy - Assessee requested adjudicating authority to allow cross-examination of witnesses and also supply certain documents - Adjudicating authority confirmed demand against assessee and rejected assessee's request in final order itself without passing a separate order in that behalf - Assessee challenged such adjudication order by way of writ petition - HELD : Though assessee had an alternative remedy by way of appeal before Tribunal, but, present writ petition was admissible on ground of breach of principles of natural justice by adjudicating authority - Without dealing with and disposing of assessee's application for cross examination by way of separate order, adjudicating authority could not have finally adjudicated issues - If adjudicating authority was of opinion that request for cross examination was not tenable, he should have, by giving reasons, rejected it and then proceeded with adjudication proceedings - Merely because assessee had made such a request belatedly, adjudicating authority cannot be allowed to deal with such an application only in final order itself - Hence, without commenting on merits of assessee's right to seek cross examination, adjudication order was set aside and adjudicating authority was directed to, first, pass a separate order on assessee's application/request letter for granting cross examination and proceed thereafter in accordance with law [Paras 6 to 9] [In favour of assessee]
Devan Parikh and Nirav P. Shah for the Petitioner. R.J. Oza for the Respondent.
Akil Kureshi, J. - Heard learned advocates for the parties for final disposal of the petition.
2. Petitioners have challenged an order dated 29th January, 2013, passed by the Commissioner of Customs & Central Excise, Surat-II [as Annexure-G to the petition] by which he was pleased to confirm various excise duty demands alongwith interest and penalties.
3. Conscious that against such order, statutory appeal before the Central Excise, Customs & Service Tax Appellate Tribunal is available, we had, by recording brief reasons in our Order dated 28th February, 2013, issued notice to the respondents. We are prompted to entertain writ petition directly on the ground that the petitioners had prima facie made out a case of breach of principles of natural justice at the hands of the adjudicating authority. Short grievance of the petitioners is that the impugned order was passed without disposing of the petitioners' request for cross examination of certain witnesses. We notice that in the said order itself, the adjudicating authority dealt with such a request and found that in the facts of the case, cross examination was not required to be granted. However, the petitioners had, been through their legal representative, taking a firm stand that only after cross examination be permitted, the petitioners would be in a position to participate in the adjudication proceedings. The petitioners have so also raised demand for supplying certain documents, which according to them were though relevant, were not supplied.
4. In the impugned order, the Commissioner himself recorded such stand of the petitioners in the following manner:-
"Finally on 17-01-2013, Shri R.S Dinkar attending for the Noticee stated that some relied upon legible documents and English translation of statements sought vide their letter dated 01-05-2010 has not been supplied to them; that they had filed preliminary reply and sought cross examination of the buyers; that the calculation has been done wrongly as benefit of cum-duty has not been given to them; that the calculations should be done correctly, notwithstanding the fact that they are disputing the whole demand; that the estimation done on the basis of gas consumption is patently wrong; that they would present their case further after cross examination and translation."
5. He, however, proceeded to deal with the petitioners' request for cross examination in paragraph 14.1 of the order and rejected such a request. He thereupon proceeded to examine the issues at length and ultimately passed the final order; as noted above, confirming various duty demands with interest and penalties.
6. Having heard learned counsel for the parties, we are inclined to interfere on the short ground of serious breach of principles of natural justice in the process of passing final order of adjudication. We say so because the adjudicating authority, though categorically informed by the representative of the petitioners that the petitioners are serious about exercise of their right to cross examination and further that any meaningful participation in the adjudicating proceedings can take place only after such cross examination is granted, the authority proceeded to decide such request only alongwith the final order of adjudication. Whether the petitioners had a right to seek cross examination in the facts of the present case, is not our brief at the moment. We, therefore, refuse to comment on the petitioners' insistence for cross examination or authority's reluctance to grant it. What we, however, find is that the petitioners had atleast a right to be told whether such application is being granted or refused before final order was passed. When the petitioners prayed for cross examination and reasonably expected that the same would be granted, they cannot be expected to participate in the adjudicating proceedings upto the final stage. In other words, without dealing with and disposing of the petitioners' application for cross examination, the adjudicating authority could not have finally adjudicated the issues. If he was of the opinion that the request for cross examination was not tenable, by giving reasons, he could have rejected it. We wonder what would have happened, if he was inclined to accept such a request. In such a situation, he himself could not have finally disposed of the show-cause notice proceedings. In either case, the petitioners had a right to know the outcome of their application.
7. Merely because the Commissioner was of the opinion that the petitioners had made such a request somewhat belatedly, would not permit him to, in the facts of the present case, deal with such an application only in the final order itself. Sum total of this discussion is that we are inclined to set-aside the impugned order and request the adjudicating authority to pass a separate order on the petitioners' application/request letter for granting cross examination of the named witnesses. We are conscious that the Commissioner has already decided such an issue, however, since we are quashing the order, this part of the order would also not survive and hence, the requirement of a fresh order. We are informed that the same officer continues to hold the office of the Commissioner of Customs & Central Excise, Surat-II. It would therefore, be not necessary to separately hear the petition once again before passing any such order. This would, however, not preclude the Commissioner from requiring the petitioners to show relevance for seeking cross examination of the witnesses.
8. Once such order is passed, the Commissioner shall issue a notice to the petitioners for further hearing of the show-cause notice and proceed thereafter in accordance with law.
9. Before closing, we may touch on one remaining aspect. We notice that the petitioners had also been asking for certain documents. The Commissioner shall also examine this aspect of the matter before finally proceeding with the adjudication.

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