Yes, The Hon’ble Madhya Pradesh High Court in Paper Trade Links Through Its Proprietor Shri Sandeep Bhargava v. Union of India & Others [2025 TAXONATION 1733 (MADHYA PRADESH)] held that failure to grant the assessee an opportunity to cross-examine witnesses whose statements form the basis of the tax and penalty proceedings amounts to a violation of the principles of natural justice. In this case, the petitioner challenged the adjudication process initiated under CGST provisions, primarily on the ground that statements of third parties were used against the petitioner without affording any chance to cross-examine such persons. The petitioner contended that this omission rendered the entire adjudication process unfair and contrary to the settled position of law under the Indian Evidence Act. The Court agreed with this contention, reiterating that the right to cross-examination is a fundamental facet of natural justice when statements are being relied upon to impose tax or penalty. The Court referred to the Supreme Court’s authoritative pronouncements on the subject and noted that the adjudicating authority had failed to comply with such well-settled norms. Consequently, the impugned order was set aside and the matter was remanded to the competent authority to proceed afresh from the stage of cross-examination. The Court directed the authorities to ensure strict adherence to the principles of natural justice and procedural fairness during the de novo proceedings.
Author’s Comments:
The denial of cross-examination in GST adjudication—especially when third-party statements are the foundation of tax or penalty demands—strikes at the very core of natural justice. It is now firmly settled that cross-examination is not a procedural luxury, but a substantive legal right when adverse evidence is being used against a taxpayer. The landmark Supreme Court decision in Andaman Timber Industries v. CCE- Central Excise unequivocally held that failure to permit cross-examination renders the adjudication order a nullity, irrespective of whether the facts otherwise appear established. The right to cross-examine is embedded not only in Section 138 of the Indian Evidence Act but also in the broader jurisprudence of fair trial and procedural equity. This principle has found reinforcement in the recent judgment of the Kerala High Court in case of Nishad K.U., Prop. M/s. Woodtunes Enterprises Versus UOI [2024 TAXONATION 3628 (KERALA)], where it was held that the CGST Act does not override the duty to ensure natural justice under Article 14 of the Constitution.
Moreover, in GST proceedings, statements recorded under duress, during search or investigation, often become the sole basis of demand. If such statements are not tested through cross-examination, the entire adjudication rests on a one-sided narrative. Officers must appreciate that natural justice is not a procedural formality—it is a constitutional imperative.
Litigation Strategy Insight:
Taxpayers must vigilantly demand cross-examination when third-party statements are cited against them, and place such request clearly on record.
Even when statements appear signed or recorded voluntarily, unless corroborated independently, their evidentiary value remains weak unless subjected to scrutiny.
If denied the opportunity, writ remedy becomes viable—not just for procedural lapse, but for breach of fundamental rights in quasi-judicial adjudication.
GST Case Law Paper Trade Links Through Its Proprietor Shri Sandeep Bhargava v. Union of India & Others
Citation-2025 TAXONATION 1733 (MADHYA PRADESH)(Click here to read full case law)
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