The Joint Commissioner Of Central Tax, Howrah CGST And Cx Commissionerate vs. M/S Forging INDIA Iron And Steel Limited And Ors

Facts

These two appeals concern an order passed by a learned writ court. M/s Forging India Iron and Steel Limited (the petitioner/appellant) was aggrieved by certain portions of the order, while the Joint Commissioner of Central Tax, Howrah CGST and CX Commissionerate (the department/appellant) was aggrieved by the entire order. The writ court had permitted the cross-examination of one Niraj Kumar Nathani. The department contended that Nathani's statement was merely corroborative and that other evidence, including statements of the company's directors and documents, indicated that the Input Tax Credit (ITC) availed was ineligible and based on fake documents. The department argued that it could proceed without Nathani's statement if this was the case. The memorandum of appeal filed by the department reiterated that Nathani's statement was corroborative, alongside other evidence like an investigation report and documentary evidence relied upon in the order-in-original dated 30.10.2024.

Held

The Court held that the statement of Niraj Kumar Nathani need not be referred to if the assessee files a statutory appeal before the appellate authority. The Court noted that numerous factual issues were involved, making it inappropriate for the writ court to adjudicate on disputed facts. Consequently, the assessee was relegated to filing an appeal before the appellate authority, the Commissioner (Appeal) CGST & Central Excise Appeal-II Commissionerate, Kolkata. The impugned order was set aside, with a direction to the assessee to prefer an appeal within 45 days from the receipt of the server copy of the order, complying with the pre-deposit condition. The assessee was permitted to file the appeal manually due to the expiry of the online filing time. The appellate authority was directed to decide the appeal petition without reference to Niraj Kumar Nathani's statement, adjudicate all other issues on merits, pass a reasoned order, and afford an opportunity of personal hearing. All issues were left open for adjudication, and the observations of the learned Single Bench in the impugned order were also set aside. The ratio is that complex factual disputes involving tax matters are best resolved through the statutory appellate mechanism rather than writ proceedings, especially when the primary evidence is disputed.

Key Issues

1. Whether the learned writ court erred in permitting the cross-examination of Niraj Kumar Nathani, considering the department's contention that his statement was merely corroborative and other substantial evidence existed to establish the ineligibility of ITC and the use of fake documents? (Question of law and fact, turning on principles of natural justice and evidence in tax proceedings). Petitioner/Appellant's Arguments: Not recorded in the judgment. Revenue/State's Arguments: The statement of Niraj Kumar Nathani is only a corroborative statement. There is other abandoned material, including the statement of the directors of the appellant/company, which clearly shows that the ITC availed was ineligible and based upon fake documents. If this is the position, the department can proceed with the matter de hors the statement of Niraj Kumar Nathani. The learned writ court ought to have held that the statement of Niraj Kumar Nathani is nothing but a corroborative one, apart from other evidences including the investigation and inspection report issued by the Bureau of Investigation, Government of West Bengal, Commercial Taxes, as well as from the other documentary evidence relied upon by the adjudicating authority in the order-in-original dated 30.10.2024.