Rajputana Stainless Limited vs. Union Of INDIA

Held

The Court held that the denial of the petitioner's request to cross-examine witnesses whose statements were not relied upon by the revenue was impermissible. The Court reasoned that while it is the right of parties to request examination of defence witnesses, including those dropped by the revenue, the request in this case was for cross-examination without examining them as defence witnesses, which is not permissible. The Court also noted with dismay that an order-in-original was passed despite an assurance given to the Court that no proceedings would be undertaken pending the petition, and without affording a proper hearing. This disregard for the Court's assurance and the lack of a hearing led the Court to quash and set aside the order-in-original. The Court found that the trend of not respecting assurances given to the Court was unpalatable and untenable. The ratio decidendi is that an order passed without affording a proper hearing, especially when an assurance has been given to the court, is liable to be set aside, and the matter should be remanded for a fresh adjudication after providing an opportunity of hearing.

Facts

The petitioner, Rajputana Stainless Limited, challenged an order dated 28.08.2019 by the Commissioner of Central GST and Service Tax, Vadodara-II. The petitioner's request for cross-examination of witnesses whose statements were recorded but not relied upon in the show cause notice was denied. The petitioner argued this denial was a non-speaking order violating natural justice. The show cause notice, dated 08.05.2017, alleged clandestine manufacture and clearance of goods between 2012-13 and 2015-16, based on various statements. The petitioner sought inspection and copies of relied-upon and non-relied-upon documents and statements, and crucially, the cross-examination of persons whose statements were not relied upon, as these could support their defence. The Commissioner rejected the request, deeming it untenable and stating that non-relied-upon statements were already supplied and there was no genuine reason for cross-examination.

Key Issues

1. Whether the denial of the petitioner's request to cross-examine persons whose statements were recorded but not relied upon in the show cause notice, by the Commissioner of Central GST and Service Tax, Vadodara-II, violates the principles of natural justice, particularly the right to a fair hearing under Section 14 of the Central Excise Act, 1944? Petitioner's Arguments: - The denial of cross-examination of witnesses whose statements were not relied upon by the revenue is a violation of natural justice as these statements could be material for the defence. - The order rejecting the request was a non-speaking order, lacking proper reasoning. - It is the prerogative of the assessee to choose defence witnesses and rely on any recorded statements, even those not relied upon by the revenue, citing M.S. Naina vs. Collector of Customs, West Bengal, Calcutta-I [2000(123) E.L.T. 39 (Cal.)]. - The subsequent order-in-original dated 29.10.2020 was passed despite an assurance given to the Court that no proceedings would be undertaken, and without affording a proper hearing. Revenue's Arguments: - The judgment notes that the revenue argued that if witnesses are not examined as prosecution witnesses and have not been relied upon by the revenue, the defence cannot request to cross-examine them without examining them as defence witnesses. The revenue also contended that the judgment relied upon by the petitioner was not relevant.