Gujarat High Court
Gyscoal Alloys Ltd vs Union Of India on 15 February, 2023
Bench: Sandeep N. Bhatt
C/SCA/2542/2021 ORDER DATED: 15/02/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2542 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 14832 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 14751 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 14852 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 16092 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 12661 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 2541 of 2021
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GYSCOAL ALLOYS LTD. & ORS.
Versus
UNION OF INDIA & ANR.
==========================================================
Appearance:
MR HEMANT G. DHARMADHIKARI, ADVOCATE assisted by
MS LALITA S. PHADKE & MR DHAVAL SHAH, ADVOCATES for the
Petitioners
NOTICE SERVED BY DS for the Respondent No. 1
MR DHAVAL D VYAS(3225) for the Respondent No. 2
==========================================================
CORAM:HONOURABLE THE CHIEF JUSTICE (DESIGNATE) MS.
JUSTICE SONIA GOKANI
and
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 15/02/2023
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE (DESIGNATE) MS. JUSTICE
SONIA GOKANI)
1. The petitioners are before this Court challenging
C/SCA/2542/2021 ORDER DATED: 15/02/2023
the ex-parte Order-in-Original No. AHM-EXCUS-003-COM-027-
28.02.2021 dated 04.09.2020 passed by the Commissioner
Central GST and Central Excise, Gandhinagar
Commissionerate, Ahmedabad allegedly in gross violation of
principles of natural justice without hearing the petitioners or
its authorized representatives.
2. The brief facts leading to the present petition are
as follows:
2.1 One of the petitioners - M/s Gyscoal Limited, is a
company incorporated under Companies Act., for manufacture
their final goods i.e. products of stainless Steel falling under
Ch. 72 of CETA, the other petitioner i.e. Viral Shah is the
Director of Gyscoal Ltd, Mr. Prakashsingh Solanki is the
employee of Gyscoal Limited and Rest Petitioners i.e. Tvisha,
Magna Vision and Superfine are the suppliers of raw
material to the Gyscoal Ltd.
2.2 As averred by the petitioner - Gyscoal Ltd that,
the officers of the Central Excise Department carried out the
search in the premises of M/s. Gyscoal Limited and withdrew
their record under the panchanama. As regards other
petitioners, their statements are recorded. The suspicion on
the part of the Excise Officers is that M/s.Gyscoal Limited
C/SCA/2542/2021 ORDER DATED: 15/02/2023
only received the central excise invoices without supply of
goods mentioned therein and other petitioners viz., Magna
Vision, M/s.Twisha and Superfine have only supplied the
invoices and not the goods. Therefore, M/s Gyscoal Limited
has availed Cenvat Credit of excise duty without receipt of
goods mentioned in the invoices. The allegation against M/s.
Twisha, Superfine, and Magna Vision is that they abated
with M/s.Gyscoal Ltd., to facilitate M/s. Gyscoal to avail
ineligible cenvat credit.
2.3 The entire Show Cause Notice is based on the
Statements recorded under Section 14 of Central Excise Act
and the impugned order has confirmed the demand qua
M/s.Gyscoal Limited on the basis of those statements which
are not subjected to cross examination.
2.4 Further, looking to the date chart that the
opportunity of personal hearing was only granted during
nationwide lockdown. Copy of the said date chart are
attached herewith.
2.5 A copy of show cause notice was provided without
relied upon documents which were submitted upon the
request by petitioner/s. Subsequently, the hearing was granted
on 27.01.2020, 10.03.2020 (public holiday), 19.03.2020,
C/SCA/2542/2021 ORDER DATED: 15/02/2023
17.04.2020, 05.08.2020, 11.08.2020, 20.08.2020, which were
physical hearing and during nationwide lockdown. The
petitioners have replied their show cause notices prior to
11.08.2020. They have filed application for cross examination
which are received by the respondent as per their affidavit in
reply.
2.6 Except main noticee - M/s Gyscoal Alloys Ltd., an
opportunity of hearing was not granted on 20.08.2020,
whereas main noticees, as per the record of hearing in
impugned order, was heard. Further, main noticee has drawn
attention to the fact on record that on 20.08.2020, actual
hearing that took placed was regarding only one show cause
notice dated 28.07.2016 i.e. proposing seizure, confiscation and
penalty and as regards show-cause notice dated 02.04.2018,
advocate for the main noticee / petitioner i.e. M/s.Gyscoal
Alloys Ltd. has submitted written submissions in respect of
application for cross-examination and requested for hearing of
the application for cross-examination. The said fact is
admitted in para 38.2 of the impugned order. It has been
further stated that the final hearing of show-cause notice
dated 02.04.2018 did not took place and record of hearing
giving reference to only final hearing of show cause notice
dated 02.04.2018 was reverted for correction by the advocate
of the petitioner, wherein it is stated that hearing took place
C/SCA/2542/2021 ORDER DATED: 15/02/2023
of only one show cause notice dated 28.07.2016 which has
been clearly mentioned. The impugned order has not referred
to the said email for correction of record of hearing.
2.7 It has been further contented that in case of all
the petitioners, reply to show cause notice filed by the
petitioner/s has not been recorded properly and in case of
petitioner, the statements and wanted to cross-examine, the
Adjudicating Authority did not grant this opportunity to the
assessee. It would be pertinent to note that the impugned
order passed by the Adjudicating Authority he has specifically
mentioned that such an opportunity was sought by the
assessee. However, no such opportunity was granted and the
aforesaid plea is not even dealt with by the Adjudicating
Authority. As far as the Tribunal is concerned, we find that
rejection of this plea is totally untenable. The Tribunal has
simply stated that cross examination of the said dealers
could not have brought out any material which would not be
in possession of the appellant themselves to explain as to
why their ex-factory prices remain static. It was not for the
Tribunal to have guess work as to for what purposes the
appellant wanted to cross-examine those dealers and what
extraction the appellant wanted from them."
2.8 In the above premise the petitioners have sought
C/SCA/2542/2021 ORDER DATED: 15/02/2023
following prayers:
"(A) That Your Lordships may be pleased call for
records and proceedings from Respondent No. 2, The
Commissioner of CGST and Central Excise,
Gandhinagar Commissionerate at Ahmedabad to verify
the noting of directions on the file;
(B) That Your Lordships may be pleased to issue
a Writ of Mandamus or a Writ of Certiorari or any
other appropriate writ, direction or order, quashing and
setting aside the decision of the Respondent no. 2
conveyed vide Order-In-Original no. AHMEXCUS-003-
COM-027-28-20-21 dated 04/09/2020 (Annexure-"A"),
and be further pleased to direct Respondent no. 2, to
allow the Petitioners to cross examine the persons
whose statements are relied upon in the Show Cause
Notice;
(C) Your Lordship may be pleased to set aside the
impugned Order in Original No. AHM-EXCUS-003-
COM-027-28-20-21 dated 04/09/2020 direct de-novo
adjudication by any other Commissioner or officer of
rank equivalent to or upper to the rank than the rank of
Respondent no. 2 and thereby transfer the matter for re-
adjudication from Respondent no. 2;
(D) Pending the hearing and final disposal of the
present petition, Your Lordships may be pleased to
restrain the Commissioner of CGST & Central Excise,
Ahmedabad, the 2nd Respondent herein, from initiating
recovery proceeding based on impugned Order In
Original. No. AHM-EXCUS-003-COM-027-28-20- 21
dated 04/09/2020 (Annexure-A);
(E) An ex-parte ad-interim relief in terms of
prayer (D) above may kindly be granted;
C/SCA/2542/2021 ORDER DATED: 15/02/2023
(F) Any other further relief as may be deemed fit
in the facts and circumstances of the case may also
please be granted."
3. Two issues that require consideration are non-
availment of an opportunity of cross-examination of the
witnesses and also non-grant of personal hearing as provided
under the statute.
4. This Court also, at the time of issuance of notice,
had referred to not granting of cross examination and pointed
out that such action is violative of principles of natural
justice. After hearing of petitioners, it is found that effective
personal hearing was also not granted and therefore there is
a complete denial of natural justice.
5. Record of personal hearing : The adjudicating
authority must maintain a record of personal hearing and
written submission made during the personal hearing.
Evidence of personal hearing and written submission on
record is very important while adjudicating the case.
6. It is observed that all the hearings were granted
physical hearing that too during complete lockdown and last
hearing was virtual hearing granted only to main noticee
C/SCA/2542/2021 ORDER DATED: 15/02/2023
with respect to only one show cause notice and noticee had
sent the correction in record of personal hearing, which is
not taken on record. However, there is an admission on the
part of the Original Adjudicating Authority in its order in
para 38.2. In this view, non-granting of effective hearing
itself is in gross violation of natural justice.
7. As regards denial of cross examination, even
though advocate for respondents tried to distinguish the
judgment of this Hon'ble Court in case of Mehek Glaze, we
do not agree with those contention. However, The Hon'ble
Apex Court in case of Andaman Timber Industries V/s
Commissioner of C.Ex., Kolkata-II, reported in CDJ 2015 SC
1277, was dealing with a case where the assessee had not
been allowed cross examination of the witnesses by the
adjudicating authority though the statement of those
witnesses were made the basis of the impugned order. This
was held "to be a serious flaw which made the order nullity
in as much as it amounted to violation of principles of
natural justice because of which the assessee was adversely
affected. It is to be borne in mind that the order of the
Commissioner was based upon the statements given by the
aforesaid two witnesses. Even when the assessee disputed the
correctness of the statements and wanted to cross-examine,
the Adjudicating Authority did not grant this opportunity to
C/SCA/2542/2021 ORDER DATED: 15/02/2023
the assessee. It would be pertinent to note that the
impugned order passed by the Adjudicating Authority he has
specifically mentioned that such an opportunity was sought
by the assessee. However, no such opportunity was granted
and the aforesaid plea is not even dealt with by the
Adjudicating Authority. As far as the Tribunal is concerned,
we find that rejection of this plea is totally untenable. The
Tribunal has simply stated that cross examination of the
said dealers could not have brought out any material which
would not be in possession of the appellant themselves to
explain as to why their ex-factory prices remain static. It
was not for the Tribunal to have guess work as to for what
purposes the appellant wanted to cross-examine those dealers
and what extraction the appellant wanted from them."
The Apex Court further held in paragraph 7 as
under :
"7. As mentioned above, the appellant had
contested the truthfulness of the statements of these two
witnesses and wanted to discredit their testimony for
which purpose it wanted to avail the opportunity of
cross-examination. That apart, the Adjudicating
Authority simply relied upon the price list as maintained
at the depot to determine the price for the purpose of
levy of excise duty. Whether the goods were, in fact,
sold to the said dealers / witnesses at the price which is
mentioned in the price list itself could be the subject
matter of cross-examination. Therefore, it was not for
C/SCA/2542/2021 ORDER DATED: 15/02/2023
the Adjudicating Authority to presuppose as to what
could be the subject matter of the cross-examination and
make the remarks as mentioned above. We may also
point out that on an earlier occasion when the matter
came before this Court in Civil Appeal No.2216 of
2000, order dated 17.03.2005 [2005 (187) E.L.T. A33
(S.C.), Commissioner v. Andaman Timber Industries
Pvt. Ltd.] was passed remitting the case back to the
Tribunal with the directions to decide the appeal on
merits giving its reasons for accepting or rejecting the
submissions."
8. The authority concerned is seeking to rely upon certain
statements following the various decisions of this Court, the
dialect of which is not necessary and the decision of the
Apex Court is sufficient enough to bring to the fore the
requirement of permitting the cross examination of witnesses
whose statements are sought to be relied upon by the
authorities.
9. In view of the above, we are of the opinion that
the order impugned passed by the authority concerned
deserves to be quashed and set aside.
10.1 Accordingly, we allow all these petitions, quashing
and setting aside the impugned order passed by the authority
concerned in all these petitions, remitting the matters to the
stage where it was left for the authority concerned to avail
an opportunity within two weeks from the date of receipt of
C/SCA/2542/2021 ORDER DATED: 15/02/2023
copy of this order through e-mail to respective advocates as
also through R.P.A.D.
10.2 Once this opportunity of personal hearing is
granted, without seeking any further adjournment, the
petitioner/s shall cooperate.
10.3 Let the adjudicating authority decide the issue of
the cross examination of the witnesses in two weeks
thereafter.
10.4 The entire process of adjudication shall be
expedited.
10.5 All concerned shall cooperate.
(SONIA GOKANI,CJ(DESIG.))
(SANDEEP N. BHATT,J)
M.H. DAVE
