Facts of the Case

V.S. Ferrous Enterprises Pvt Ltd, Hyderabad, Telangana (the Petitioner), filed Writ Petition No. 7008 of 2021 before the High Court for the State of Telangana under Article 226, against the Union of India, the CBIC, and the Additional/Joint Commissioner, Central Tax, Hyderabad GST Commissionerate (Respondent No.3), challenging a letter dated 10.03.2021 (SCN No. 07/2019-20-Adjn(GST)-JC-GST-AE) by which the petitioner's request to cross-examine witnesses, whose statements were relied on in a show cause notice dated 30.12.2019/13.04.2020 issued under the GST regime, was rejected. An interim stay of the adjudication proceedings was granted pending disposal. When the matter came up for hearing on 03.10.2023 before Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty, the Bench was informed that two identical writ petitions — W.P. Nos. 6866 and 6857 of 2021 — had already been allowed and disposed of by a common order dated 27.09.2023 on identical facts, in which the Department's counter affidavit had disclosed that the original rejection letter stood recalled by a subsequent letter dated 23.07.2021, permitting cross-examination on a case-to-case basis depending on relevance.

Issues Involved

  1. Whether the letter dated 10.03.2021 rejecting the petitioner's request to cross-examine witnesses relied upon in the GST show cause notice was illegal, arbitrary, and violative of Articles 19(1)(g), 20 and 21.
  2. Whether the present writ petition, being on facts identical to the already-decided W.P. Nos. 6866 and 6857 of 2021, should be disposed of on the same terms.
  3. Whether the Department's recall of the rejection letter, permitting case-to-case cross-examination, adequately safeguarded the petitioner's rights.

Petitioner's Arguments

  • The impugned letter dated 10.03.2021, rejecting permission to cross-examine witnesses whose statements were relied upon in the show cause notice dated 30.12.2019, was illegal, arbitrary, and violative of Articles 19(1)(g), 20 and 21 of the Constitution.
  • Pending final disposal, the adjudication proceedings pursuant to the show cause notice ought to be stayed, since proceeding without permitting cross-examination would cause serious prejudice.
  • In the connected identical matters, senior counsel for the petitioners expressed the apprehension that the Department's recall order dated 23.07.2021, while purporting to permit "case to case" cross-examination, should not become a device to arbitrarily deny cross-examination of relevant witnesses altogether.

Respondent's Arguments

  • In the counter affidavit filed in the connected matters, the Department stated that in view of the huge revenue involved and the undue delay in concluding adjudication, the original letter dated 10.03.2021 rejecting cross-examination stood recalled, and the request for cross-examination would be considered on a case-to-case basis, depending on relevance to the adjudication proceedings, as communicated to the petitioners vide letters dated 23.07.2021.
  • Departmental counsel produced the recall correspondence dated 23.07.2021 before the Court, confirming that cross-examination would not be blanket-denied but assessed for relevance to the pending adjudication.

Court Order/Findings

  • Since two identical writ petitions on the same issue (W.P. Nos. 6866 and 6857 of 2021) had already been allowed and disposed of by a common order dated 27.09.2023, the Bench found it appropriate to dispose of the present, identical writ petition on the same terms.
  • In the common order being followed, the Court had directed that the authorities ensure the show cause proceedings are recalled/resumed at the earliest, that the petitioner render full cooperation, and that cross-examination of relevant witnesses be carried out at the earliest, while cautioning the petitioner against subjecting witnesses to unnecessary cross-examination on irrelevant issues.
  • The present writ petition (WP No. 7008 of 2021) was accordingly disposed of without costs, in terms of that common order, and pending miscellaneous applications were closed.

Important Clarification

  • A GST adjudicating authority's outright refusal to permit cross-examination of witnesses whose statements are relied upon in a show cause notice is open to constitutional and natural-justice challenge; however, once the authority itself recalls the rejection and agrees to permit cross-examination on a case-to-case, relevance-tested basis, courts tend to hold the petitioner to that safeguard rather than granting an unqualified right to cross-examine every witness.
  • Petitioners who secure this qualified right are, in turn, cautioned not to misuse it by cross-examining witnesses on matters outside their recorded statements or otherwise irrelevant to the adjudication.
  • Where the identical issue between the same category of petitioners has already been decided by a common order, courts routinely dispose of follow-on identical petitions "in terms of" that common order, without independent reasoning.

Sections Involved

  • Show cause notice adjudication under the Central Goods and Services Tax Act, 2017 framework (SCN No. 07/2019-20-Adjn(GST)-JC-GST-AE, Hyderabad GST Commissionerate) — cross-examination rights examined as part of principles of natural justice in GST adjudication proceedings.
  • Articles 19(1)(g), 20 and 21, Constitution of India — fundamental rights invoked in challenging the denial of cross-examination.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee — the outright denial of cross-examination did not survive, since the Department itself recalled its rejection letter and agreed to case-to-case cross-examination, with the authorities directed to complete the show cause proceedings, including cross-examination of relevant witnesses, at the earliest.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana, Hyderabad
  • Case No.: Writ Petition No. 7008 of 2021
  • CNR: Not available on record
  • Coram: Justice P. Sam Koshy and Justice Laxmi Narayana Alishetty
  • Decision Date: 03.10.2023
  • Disposal Nature: Disposed following an earlier identical order

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