M/S. Amritha Marketing vs. The Joint Commissioner Of CGST And Central Excise

Held

The Court held that the rejection of the request to cross-examine the persons who retrieved the data did amount to a violation of the principles of natural justice. The Court reasoned that while the rejection order was an intermediate order passed during assessment proceedings, it had a bearing on the rights of the assessee and could be challenged as a ground of attack while assailing the final order, citing the principle from Kores (India) Ltd. v. Bank of Maharashtra. Regarding the second issue, the Court held that the respondent was not justified in resorting to best judgment assessment under Section 74 of the CGST Act, 2017. The Court emphasized that the omission in Section 74(9) to confer power for best judgment assessment appeared conscious and deliberate, and courts cannot supply what the legislature has deliberately omitted. The Court relied on the principle that taxing statutes must be construed strictly and that there must be a statutory basis for any action taken by the assessing officer. The Court also referred to discussions in the 6th GST Council Meeting and a Madras High Court decision in PS.Subramaniam Chettiar & Sons vs. Joint Commercial Tax Officer III, Dindigul, to fortify its conclusion. Rule 31 of the CGST Rules, 2017, was found irrelevant. Consequently, the impugned orders were quashed. The Court also made observations regarding the assessees' obligation to maintain accounts.

Facts

The petitioners, wholesale dealers of groceries and FMCG items, are challenging orders passed by the Joint Commissioner of CGST & Central Excise. The revenue received information about under-reporting of sales turnover, leading to search operations, seizure of computer systems and documents, and recording of statements under Section 70 of the CGST Act. The proprietors were arrested, and show cause notices under Section 74 of the CGST Act were issued proposing tax demand, penalty, and interest for different financial years. The petitioners sought to cross-examine the persons who retrieved data from a private agency (FDI Labs), but this request was rejected. Previous writ petitions challenging this rejection were dismissed as infructuous after the final orders were passed. The current writ petitions challenge these final assessment orders.

Key Issues

1. Whether the rejection of the petitioners' request to cross-examine the persons who retrieved the data amounts to a violation of the principles of natural justice, thereby vitiating the impugned final orders? 2. Whether the respondent was justified in resorting to best judgment assessment under Section 74 of the CGST Act, 2017? Petitioner's Arguments: The petitioners contended that the rejection of their request to cross-examine the data retrieval personnel violated the principles of natural justice. They argued that the impugned orders were arbitrary and passed in gross violation of judicial discipline. They also argued that the respondent was not justified in resorting to best judgment assessment as there was no express statutory provision empowering them to do so under Section 74 of the CGST Act. Revenue's Arguments: The respondent argued that the writ petitions were not maintainable as the appeal remedy had not been exhausted. They also submitted that admissions made by the assessees in their statements recorded under Section 70 of the Act meant no relief should be granted. The respondent further objected to the first point being taken up for determination, stating that it was rendered moot by the dismissal of previous writ petitions.