HC Quashes Order for Denial of Cross-Examination Breaching Natural Justice

Case Details: X L Interiors vs. Deputy Commissioner (Intelligence), SGST Department - [2025] 178 taxmann.com 108 (Kerala)

Judiciary and Counsel Details

• Ziyad Rahman A.A., J.
• K.S.Hariharan Nair, Rajath R Nath, Dheeraj Sasidharan, Smt. G. Remadevi & Smt. Harima Hariharan, Advs. for the Petitioner
• Smt. Reshmitha R. Chandran, SR.G.P for the Respondent

Facts of the Case

The assessee, subjected to inspection by the intelligence unit at its premises, faced a show cause notice alleging suppression of turnover based on statements of several witnesses and documents, including bank statements and books of accounts, collected during the inspection. The assessee filed detailed objections and produced supporting documents before the adjudicating authority and requested permission to examine or cross-examine certain witnesses. The authority rejected the request without considering whether any of the witnesses were relevant, observing that the assessee had sought to examine multiple persons unrelated to the transactions. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that denial of opportunity to cross-examine a key witness, whose transactions with the assessee were relied upon to treat advances as turnover, violated principles of natural justice. It was observed that examination of this witness was necessary to adjudicate disputes regarding the nature of the transactions in a judicious manner. Consequently, the impugned adjudication order was quashed, and the revenue was directed to re-hear the matter, ensuring that the assessee is afforded the opportunity to examine the relevant witness.