CGST Act | Right To Cross-Examine Is Not An Unfettered Right At SCN Stage, Party Must Specify Reasons: Delhi High Court

While dealing with a case under the Central Goods & Services Tax Act 2017, the Delhi High Court has held that though cross-examination can be granted in certain proceedings if it is deemed appropriate, the right to cross-examine cannot be an unfettered right.A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed,“The rationale behind setting aside an order/judgment on the grounds of non-provision of the right to cross-examine is to safeguard the affected party from being prejudiced due to non-providing of cross examination. Therefore, such reasoning presumes/implies the existence of prejudice. In other words, if the alleging party fails to prove any substantial prejudice caused to it due to such non-provision, it shall not have the inherent right to set aside such an order/judgment.”The development comes in a writ petition preferred by a textile firm challenging an order of the Adjudicating Authority under the CGST Act, rejecting its request to cross-examine certain witnessess during the Show Cause Notice proceedings.The prayer for cross-examination was denied on the ground that the statements of witnessess were only corroborative of undisputed documentary evidence already on record, and thus did not warrant cross-examination.The Adjudicating Authority in this regard had relied on the decision of the Telangana High Court in Mohammed Muzzamil and Another vs. The CBIC which held that cross-examination cannot be claimed as a matter of right especially if it does not make any material difference.Thereafter, an order raising demand upon the Petitioner-firm was passed. The Petitioner then moved the High Court.At the outset, the High Court cited its recent decision in Sushil Aggarwal v. Principal Commissioner Of Customs (2025), where with respect to the Customs Act 1962, it held that ̌a person facing charges under the Customs Act, 1962 does not have an unfettered right under Section 138B, to cross-examine the informant or person making incriminatory statements.The bench also relied on Supreme Court's decision in M/s. Telestar Travels Pvt. Ltd. v Special Director Of Enforcement (2013) where it was held that while cross-examination would be required in certain cases, it need not be given as a matter of right in all cases. “The provision of the opportunity to cross-examine depends on the facts and circumstances of each case and is warranted only when the party seeking such an opportunity is able to demonstrate that prejudice would be caused in the absence thereof,” the High Court thus held.In the present case, it noted, the request to cross-examine certain witness statements was rejected because their statements were only corroborative of undisputed documentary evidence.It thus held that parties cannot, by praying for cross-examination, convert Show-cause Notice proceedings into “minitrials”. It added,“Persons seeking cross-examination ought to give specific reasons why cross-examination is needed in a particular situation and that too of specific witnesses. A blanket request to cross-examine all persons whose statements have been recorded by the Department, many of whom are typically employees, sellers, purchasers, or other persons connected to the entity under investigation, cannot be sustained. If a prayer for cross-examination is made, the Authority has to consider the same fairly and if the need is so felt in respect of a particular person, the same ought to be permitted. If not, the Authority can record the reasons and proceed in the case. Moreover, cross examination need not also be of all persons whose statements are recorded. It could be permitted by the Authority in case of some persons and not all.”As such, the petition was disposed of with liberty to the Petitioner to avail alternate statutory remedy.Appearance: Mr. Vivek Sarin, Mr. Akash Gupta, Ms. Divyanshi Singh, Mr. Dhruv Dev Gupta & Mr. Satish C. Kaushik, Advocates for Petitioner; Ms. Anushree Narain, Sr. Standing Counsel with Mr. Ankit Kumar, Adv for RespondentsCase title: M/S. Vallabh Textiles v. Additional Commissioner Central Tax GST, Delhi East And OrsCitation: 2025 LiveLaw (Del) 483Case no.: W.P.(C) 4576/2025Click here to read order

CGST Act | Right To Cross-Examine Is Not An Unfettered Right At SCN Stage, Party Must Specify Reasons: Delhi High Court

Kapil Dhyani

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