Madhya Pradesh HC Dismisses Writ Alleging Denial of Witness Cross-Examination in Bogus GST ITC Case, Directs to Pursue Appellate Remedy [Read Order]

The Madhya Pradesh High Court has dismissed a batch of writ petitions alleging denial of cross-examination of witnesses in a case involving alleged bogus Input Tax Credit ( ITC ) under GST ( Goods and Services Tax) Act, directing the petitioners to pursue the statutory appellate remedy instead.

The petitions, heard together due to their identical nature, challenged an order in original dated 19.12.2024 passed by the AdditionalCommissioner, CGST and Central Excise, Bhopal, which imposed recovery of ITC, interest, and penalty for the tax periods 2017-18 and 2018-19.

GST READY RECKONER: Complete Topic wise Circulars, Instructions & Guidelines Click here

The case started when the DGGI, Bhopal, investigated M/s R.A. Enterprises for using and transferring fraudulent ITC totaling more than ₹1.39 crore. As a result, 18 entities received show-cause notices under the applicable CGST and IGST Act provisions.

The petitioners cited a number of court decisions to buttress their claim that the order violated natural justice principles, specifically since it denied the authorities' claimed witnesses the opportunity to be cross-examined.

However, the respondents contended that an efficacious alternative remedy of appeal under Section 107 of the CGST Act was available, and the writ was filed to circumvent the pre-deposit requirement for appeals.

After hearing both sides, the Court clarified that territorial jurisdiction lay with the Indore Bench, given the petitioner’s registration and business location in Indore, despite the adjudicating authority being in Bhopal.

On the substantive issue, the Court reiterated that writ jurisdiction under Article226 is generally not invoked when an effective statutory remedy exists, except in cases of complete lack of jurisdiction or gross violation of natural justice.

In the present case, the court noted that the alleged denial of cross-examination and its prejudicial effect were factual matters best examined by the appellate authority, which is empowered to review all such grounds and evidence.

All-in-One Manual with Updated GST Laws & Provisions, Click here

JusticesVivek Rusia and Gajendra Singh observed that “The petitioner is alleging the violation of principle of natural justice solely on the ground that the opportunity to cross-examine the witnesses was not given. The petitioner has failed to point out when the request was made for cross-examination of the witnesses. By not giving an opportunity to cross-examine the witnesses, whether any prejudice was caused, is liable to be examined by the appellate authority after examining the record and the relevancy of the deposition of the witnesses. The appellate authority would be competent to decide all the issues and grounds raised in the writ petition. There should not be an avoidance of pre-deposit condition for the entertainment of a statutory appeal.”

Accordingly, the High Court dismissed the writ petitions.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates