M/S Elora Tobacco Company Limited Through Its Dharmendra Singh Parmar vs. Union Of INDIA

Held

The Court allowed the writ petition. It held that the respondents are mandated by Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017, to return non-relied upon documents within 30 days of issuing the show cause notice. The Court found that the petitioner is entitled to receive these original non-relied documents to enable them to prepare their defence and reply, as fair hearing necessitates affording the petitioner due opportunity to raise all available defences. Regarding the right to cross-examine witnesses, the Court held that the right to fair hearing and personal hearing requires the petitioner to be given the right to cross-examine witnesses whose evidence has been relied upon in the show cause notices. The Court expected the adjudicating authority to afford this right at the appropriate stage, adhering to the principles of natural justice, and referred to the Supreme Court's judgment in 'Andaman Timber Industries Vs Commissioner of Central Excise'. The Court directed the respondents to hand over all original seized documents not relied upon in the show cause notices to the petitioner. Upon receipt, the petitioner must submit their reply within 30 days, and the respondents will adjudicate the case on its merits, affording the petitioner a personal hearing and the right to cross-examine witnesses at the appropriate stage. The Court explicitly stated it had not expressed any opinion on the merits of the case.

Facts

M/s Elora Tobacco Company Limited (the petitioner) filed a writ petition seeking the release of original documents seized by the Directorate General of GST Intelligence (DGGI) during searches. The petitioner also sought the right to submit a detailed reply, cross-examine witnesses, and receive a personal hearing. The DGGI had issued show cause notices dated 08.06.2022 and 03.08.2022, proposing a GST and Cess demand of Rs. 19,462,273,010/- for the period 01.07.2017 to 10.06.2020, alleging clandestine supply of filter cigarettes without invoices. The petitioner contended that the respondents failed to provide original non-relied documents within 30 days as required by Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017, hindering their ability to file a reply. The respondents stated they had no objection to returning non-relied documents and that the right to cross-examine should be sought via an application to the adjudicating authority.

Key Issues

1. Whether the respondents are obligated to release original non-relied upon documents seized from the petitioner's premises within 30 days of the show cause notice, as per Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017, to enable the petitioner to file a proper reply and prepare their defence? 2. Whether the petitioner has a right to cross-examine witnesses whose evidence has been relied upon in the show cause notices during the adjudication proceedings, in accordance with the principles of natural justice? Petitioner's Arguments: The petitioner argued that the respondents' failure to provide original non-relied documents violates Section 67(3) of the CGST Act and Rule 27 of the Central Excise Rules, 2017, and relies on 'Methodex Systems Ltd. Vs Union of India'. They further contended that the right to cross-examine witnesses, whose statements form the basis of the show cause notices, is essential for a fair hearing, citing 'Andaman Timber Industries Vs Commissioner of Central Excise' and 'Rajputana Stainless Ltd. Vs Union of India'. Respondents' Arguments: The respondents agreed to return original non-relied documents. Regarding cross-examination, they argued that the petitioner should file an appropriate application before the adjudicating authority and that the High Court is not the forum for such directions.