Prakash Raghunath Autade vs. The Union Of INDIA And Anr

Held

The Court held that the petitioner does not have a right to cross-examine witnesses whose statements were relied upon in the show-cause notice prior to filing a reply. The Court reasoned that Section 9D of the Act applies to inquiries or proceedings, and a stage prior to the issuance of a show-cause notice cannot be considered such an inquiry or proceeding. The statements recorded before the issuance of a show-cause notice are not made in the course of an inquiry or proceeding under the Act, and therefore, no right accrues to insist on cross-examination at that stage. The right to cross-examine arises only after the adjudication proceedings commence and the revenue chooses to rely on those statements as evidence. The Court granted liberty to the petitioner to file a final reply within a fortnight, directed the authority to decide whether to proceed after receiving the reply, and stipulated that if any witness is summoned during adjudication and their statement is found relevant, it shall not be relied upon against the petitioner unless a reasonable opportunity to cross-examine is provided. The Court also directed that such evidence be recorded in the petitioner's presence and a final order be passed based on evidence and materials on record. All contentions on merits were left open.

Facts

The petitioner, Prakash Raghunath Autade, received a show-cause-cum-demand notice dated September 24, 2020, from the Principal Additional Director General, Directorate General of GST Intelligence, Pune. The notice alleged violations of the Central Excise Act, 1944, and other statutory provisions. The petitioner responded on October 23, 2020, denying all allegations and stating the letter was not his formal reply. He requested cross-examination of witnesses whose statements formed the basis of the show-cause notice, citing Section 9D of the Act. He also requested consolidation with another show-cause notice. The Commissioner, by letter dated July 13, 2021, deemed the cross-examination request premature, stating it would be examined after a formal reply was filed. Aggrieved by the denial of this opportunity, the petitioner filed a writ petition seeking a prohibition on further proceedings until compliance with Section 9D.

Key Issues

1. Whether the petitioner has a right to cross-examine the witnesses whose statements were relied upon in the show-cause notice prior to filing a reply to the notice, under Section 9D of the Central Excise Act, 1944? Petitioner's Argument: The petitioner contended that Section 9D of the Act mandates the opportunity for cross-examination of witnesses whose statements are used to issue a show-cause notice, and this right accrues before filing a reply. They relied on decisions from the Punjab and Haryana High Court. Respondents' Argument: The respondents argued, citing decisions from the Allahabad High Court, that the right to cross-examination arises only during the adjudication proceedings after the reply to the show-cause notice has been filed and the revenue decides to rely on those statements as evidence. They contended that a show-cause notice is based on prima facie findings and not an adjudication.