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Corporate News *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court. *  GST cross-empowerment doesn’t require separate notification; parallel proceedings on same issue remain barred: Madras High Court. *  Customs can’t insist on Form-I for India–UK CETA tariff claims supported by valid origin declaration: CBIC.    *  Missing vehicle details in E-Way bill cannot alone justify Rs. 17 lakh GST penalty: GSTAT. *  GST waiver application can’t be rejected solely for missing DRC-03A if tax was already paid: Madras High Court. *  Paver that reaches 9 metres only with bolt-on extensions can’t claim customs duty exemption: CESTAT. *  Profit from resale of  airline cargo space is not taxable as business auxiliary service: CESTAT. *  CENVAT credit reversal on trading activity can’t be calculated using entire sale price: CESTAT.     *  GST refund can’t be rejected on grounds beyond show cause notice: Calcutta High Court quashes ITC refund rejection. *  GSTR-2A entry alone can’t decide whether ITC was available for use: Sikkim High Court. *  Punjab & Haryana High Court quashes SVLDRS rejection, directs fresh consideration of interest waiver claim. *  GSTN introduces EmSigner version 3.3 for new DSC tokens issued from September 21. *  TDS paid from own funds not part of taxable value: CESTAT upholds service tax demand on wrong rate. *  Second E-way bill was fraudulently generated with intent to evade tax: GSTAT upholds penalty. *  Rs. 20 Lakh monetary limit bars admission without proven exception: GSTAT. *  Sec. 110(5) Customs Act: Patna High Court mandates pre-decisional hearing before attachment extension. *  Arrest not necessary in every investigation: Telangana High Court grants anticipatory bail in GST ITC fraud case. *  CBDT Removes Arrest Provision for Tax Recovery. *  Bagasse is agricultural waste, Rule 6 CENVAT demand unsustainable: CESTAT. *  Refund of accumulated ITC allowed under inverted duty structure for fabric processing: GSTAT. *  GSTAT dismisses departmental appeal over Rs. 6.16 lakh IGST penalty for failing to meet Rs. 20 lakh monetary threshold. *  GST portal constraint can’t block IGST appeal pre-deposit adjustment from amount deposited under protest: Allahabad High Court. *  Small export consignments up to Rs. 3 lakh exempted from RCMC requirement: DGFT. *  CBIC cuts EMI scheme paperwork from 10 documents to 3 to boost MSME participation.        
Subject News *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty. *  Expired E-way bill and wrong vehicle number: GSTAT upholds ?3.50 lakh penalty on goods in transit. *  GST assessment order quashed for failure to prove service of show cause notice: Patna High Court. *  GST registration cancellation can’t be based on unquantified ITC mismatch before verification of suppliers: Calcutta High Court. *  Supreme Court reserves verdict on State’s power to levy additional sales tax, surcharge or cess. *  Customs can’t use residual penalty provision after confiscation grounds fail: Bombay High Court. *  Insurance premium collected and remitted to insurer not taxable as part of microfinance company’s service value: CESTAT. *  Sec. 62 GST assessment orders deemed withdrawn after delayed return filing: Andhra Pradesh High Court. *  CESTAT allows CENVAT credit on rent-a-cab and staff  welfare expenses. *  Sec. 110(5) Customs Act: Patna High Court mandates pre-decisional hearing before attachment extension. *  Entire GSTR-3B vs GSTR-2A difference can’t be disallowed without invoice-wise verification: GSTAT remands ITC mismatch case. *  GST audit has to be only conducted by “Proper Officer”: Uttarakhand High Court. *  Ignored taxpayer replies can’t be considered through second ex-parte GST order under section 161: Allahabad High Court. *  Whether transitional credit can be denied on technical grounds: GSTAT questions legality of sec. 74 penalty. *  No GST on assignment of GIDC leasehold rights: Gujarat High Court orders refund of ITC reversal with interest. *  SGST assignment doesn’t bar DGGI’s nationwide enforcement powers: Delhi High Court. *  DRI | 3 years custody and slow trial alone can’t override NDPS bail bar in commercial quantity case: Delhi High Court. *  Customs refund can’t be adjusted against disputed demand that has not attained finality: CESTAT. *  Calcutta High Court quashes GST proceedings based solely on omitted rule 96(10). *  Unreliable panchnama, unproduced private ledger can’t prove clandestine removal: CESTAT.    

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GST update /2026-27/0093

Shri Sheik Dawood & Ors. v. Additional Commissioner of GST & Central Excise

GST UPDATE

Hon’ble Court: Madras High Court
Case Title: Shri Sheik Dawood & Ors. v. Additional Commissioner of GST & Central Excise
Appeal No. & Citation:W.A. Nos. 2615, 2617 and 2616 of 2026
Hon’ble Judge(s) DR.JUSTICE ANITA SUMANTH & HON'BLE MR.JUSTICE S.RAVEEKUMAR
Date of Order 07-09-2026
Outcome Appeal Allowed
 

Brief Facts of the Case

The appellants, comprising MNS Enterprises, Noordeen Enterprises and Shri Sheik Dawood, challenged a common Order-in-Original. The proceedings concerned denial of Input Tax Credit (ITC) on the allegation that the transactions in respect of which ITC had been claimed were fictitious and that the ITC claim was bogus. The show cause notices issued relied primarily upon statements of two individuals. The appellants submitted in their reply that the two individuals had been coerced and threatened and had therefore made statements adverse to the appellants. They reiterated their claim of ITC and specifically requested an opportunity to cross-examine the said individuals. The request was also reiterated during the personal hearing. However, the Assessing Authority denied the request, observing that the right of cross-examination was not an absolute right.  The appellants approached the High Court, primarily contending that denial of cross-examination, despite reliance upon the statements of the two individuals, violated the principles of natural justice.

Question before Hon’ble Court

Whether denial of Cross Examination despite specific request for the same is violative of principles of Natural Justice?

Brief Arguments by Appellant

The appellants contended that the show cause notices as well as the Order-in-Original specifically relied upon the statements of two individual to hold that the transactions were fictitious and the ITC claimed was bogus.
Despite a specific request, the Assessing Authority denied the opportunity to cross-examine these individuals and gave no adequate reason for such denial. Reliance was placed on various case laws:
 

Cases Relied Upon

Case Law Citation
Andaman Timber Industries v. Commissioner of C.Ex., Kolkata 2015 (324) ELT 641 (SC)
Vijayaraj Surana v. Commissioner of Customs, Chennai 2016 (340) ELT 308 (Mad)
K.Srinivasulu v. Commissioner of Customs, Chennai 2017 (345) ELT 477 (Mad.)
M.P.Ganesan v. Commercial Tax Officer, Chennai 2020 (42) GSTL 178 (Mad.)
 

Brief Arguments by Respondent

The department argued that the right of cross examination is not an absolute right. Further, the two individuals had been afforded opportunity before the Additional Chief Metropolitan Magistrate to retract their statements if so inclined, but they had not chosen to do so.

Findings and Judgement

The Court held that in the present case, the conclusions adverse to the appellants flowed directly from the statements of the two individuals, upon which the Assessing Authority had placed substantial reliance. Therefore, the opportunity of cross-examination ought to have been granted.
The Court distinguished a situation where the Assessing Authority chooses not to rely upon such statements. Had the statements been eschewed, the question of cross-examination would have been different. However, since the statements were retained and relied upon, denial of cross-examination was held to be impermissible in the circumstances of the case.
Accordingly, the impugned order was set aside and Assessing Authority is directed to afford reasonable opportunity to the assessee to cross examine the two individuals and then frame the assessment.

 

CA Pradeep Jain_ 

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Opinion

Author’s Comment

It has been observed in most of the practical scenarios that the opportunity of cross-examination is often not given to the taxpayers by the Department, holding that the same is not an absolute right. However, the current judgment marks an important milestone in the GST era, as the denial of such opportunity amounted to a violation of the principles of natural justice, because of which the assessee was adversely affected.
Importance of Cross Examination is significant as the statements recorded during investigation may sometimes be obtained under coercion or compulsion. Therefore, in such cases, the statement loses its evidentiary value. The right to cross-examine flows from the principles of Natural Justice, which provide that evidence may not be read against a party unless the same has been subjected to cross-examination or, at least, an opportunity has been given for cross-examination. Thus, the provisions of Section 138 of the Indian Evidence Act are not only a technical rule, but are a rule of essential justice. The testimony of a witness is not legal evidence unless it is subjected to cross-examination. Even where statements are admissible, their evidentiary value depends upon their voluntariness and truthfulness, which can only be tested through cross-examination. In the absence of such an opportunity, reliance on such statements causes serious prejudice to the assessee.
However, the situation still remains ambiguous. While it is clear that cross-examination is mandatory, especially when the taxpayer has specifically requested for the same. An important question arises as to what would be the position in situations where the taxpayer has not requested for cross-examination. Whether, in such situations, the statements relied upon by the department would lose their evidentiary value merely because the same have not been subjected to cross-examination remains an important question.
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