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_

This is solely for educational purpose

Readers can also access this from our

Linkedin account : www.linkedin.com/in/ca-pradeep-jain-b6a31a16

& Our Website : new.capradeepjain.com

Comments

GST update /2026-27/0093

GST UPDATE

Brief Facts of the Case

Question before Hon’ble Court

Brief Arguments by Appellant

Cases Relied Upon

Brief Arguments by Respondent

Findings and Judgement

CA Pradeep Jain_

Opinion

Author’s Comment

Post a Comment

Query