Facts of the Case

The Petitioner, M/s. Vallabh Textiles, filed a writ petition challenging adjudication orders confirming GST liability amounting to ₹7.13 crores along with penalty. The dispute arose from a Show Cause Notice (SCN) issued based on intelligence gathered by the Directorate General of GST Intelligence alleging that the Petitioner acted as a commission agent and conducted unaccounted sales through kaccha ledgers, resulting in GST evasion.

Earlier, the Petitioner had challenged the SCN on the ground that it consolidated multiple financial years, which was rejected by the Court. Subsequently, during adjudication, the Petitioner sought cross-examination of certain witnesses, which was denied by the authority. The present writ petition primarily challenged such denial and the consequential demand orders. 

Issues Involved

  1. Whether denial of cross-examination violates principles of natural justice.
  2. Whether such denial justifies invocation of writ jurisdiction under Article 226.
  3. Whether the Petitioner should be relegated to the statutory appellate remedy under Section 107 of the CGST Act.

Petitioner’s Arguments

  • The denial of cross-examination of key witnesses prejudiced the defense and violated principles of natural justice.
  • The adjudication proceedings relied on third-party statements, making cross-examination essential.
  • The impugned orders were arbitrary and contrary to statutory and constitutional provisions.

Respondent’s Arguments

  • The order denying cross-examination is appealable under Section 107 of the CGST Act.
  • Cross-examination is not an absolute right, especially when evidence is documentary and corroborative.
  • The Petitioner should avail statutory appellate remedy instead of invoking writ jurisdiction.

Court’s Findings / Observations

  • Cross-examination is not an unfettered or absolute right and depends on facts of each case.
  • It is required only where denial results in substantial prejudice.
  • Where statements are merely corroborative of documentary evidence, cross-examination may not be necessary.
  • A blanket request to cross-examine multiple witnesses cannot be permitted.
  • SCN proceedings cannot be converted into mini-trials through indiscriminate cross-examination requests.
  • Issues raised were largely factual and not suitable for adjudication under writ jurisdiction.
  • Availability of statutory remedy under Section 107 bars direct invocation of writ jurisdiction in such circumstances.

Court Order

  • The writ petition was disposed of.
  • The Petitioner was directed to file an appeal under Section 107 of the CGST Act within 30 days.
  • The appellate authority was directed to consider the appeal on merits without limitation objection.

Important Clarifications by the Court

  • Cross-examination must be justified with specific reasons, not sought as a matter of routine.
  • Authorities may allow cross-examination selectively for specific witnesses if required.
  • Denial of cross-examination alone does not automatically invalidate proceedings unless prejudice is demonstrated.
  • Writ jurisdiction cannot be used to bypass statutory remedies in tax matters.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/68909042025CW45762025_184413.pdf

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