Cross-examination of witness could not be demanded before filing of reply to SCN & before commencing of adjudication.

Prakash Raghunath Autade Vs Union of India (Bombay High Court)

Conclusion: Any statement recorded prior to the issuance of such show-cause notice is not a statement recorded in the course of an inquiry or proceeding and no right accrues in favour of a noticee to insist that he be offered for cross-examination the witnesses, whose statements have been recorded. It was only after the statements of witnesses were recorded by the relevant authority in course of adjudication of proceedings and such evidence was regarded as relevant that the noticee had the right to claim that he be extended the opportunity to cross-examine such witnesses so as to extend to him fair, reasonable and adequate opportunity of defence.

Held: Commissioner had issued a show-cause-cum-demand notice calling upon assessee to explain why action should not be taken against him for alleged violation of the provisions of the Central Excise Act, 1944 as well as other statutory provisions. Assessee referring to the statements of witnesses recorded prior to the issuance of the show-cause notice, called upon the Commissioner to produce such witnesses for being cross-examined by him. Commissioner responded by stating that assessee not having replied to the show-cause notice, his request for cross-examination of the witnesses, at that stage, was premature. It was also stated that as and when assessee filed his reply, his request for cross- examination of the witnesses would be examined in the light of the facts and circumstances of the case. It was held that prior to the issuance of a show-cause notice, neither any inquiry nor a proceeding can be said to have commenced. Therefore, any statement recorded prior to the issuance of such show-cause notice is not a statement recorded in the course of an inquiry or proceeding and no right accrues in favour of a noticee to insist that he be offered for cross-examination the witnesses, whose statements have been recorded and are referred to in the show-cause notice, even prior to a reply thereto being submitted. Once the show-cause notice was issued, it was for assessee to deny and dispute the allegations levelled therein and if he so chose to raise such defence as he might be advised. Omission and/or failure to reply to a show-cause notice might not, in all cases, amount to an admission of the allegations. In the present case, such question of admission did not arise because assessee had clearly denied and disputed the allegations levelled against him. The only question was at what stage would he be entitled to cross-examine the witnesses. As had been held in G-Tech Industries as well as in Parmarth Iron Pvt. Ltd., it was only after the statements of witnesses were recorded by the relevant authority in course of adjudication of proceedings and such evidence was regarded as relevant that the noticee had the right to claim that he be extended the opportunity to cross-examine such witnesses so as to extend to him fair, reasonable and adequate opportunity of defence.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. The Principal Additional Director General, Directorate General of GST Intelligence, Pune Zonal Unit, Pune issued a show-cause-cum-demand notice dated 24^th September, 2020 calling upon the petitioner to explain why action, as proposed in paragraph 17 thereof, should not be taken against him for alleged violation of the provisions of the Central Excise Act, 1944 (hereafter “the Act”, for short) as well as other statutory provisions.

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