Introduction

In a significant judgment dated 9th April 2025, the Delhi High Court in the case of M/S Vallabh Textiles v. Additional Commissioner Central Tax GST, Delhi East, W.P.(C) 4576/2025, has clarified the contours of the right to cross-examination during GST adjudication proceedings. The judgment offers vital guidance on when cross-examination should be allowed and stresses that show cause notice (SCN) proceedings should not be turned into "mini-trials".

The Petitioner challenged the proceedings primarily on the ground that its request to cross-examine five key witnesses was denied by the Adjudicating Authority on 20th January 2025. The denial was based on the premise that the statements of these witnesses were only corroborative of undisputed documentary evidence.

Court's Findings

The Delhi High Court rejected the Petitioner’s plea to set aside the adjudication solely on the ground of denial of cross-examination.

The Court made a crucial observation:

"The Court is of the considered view that parties cannot, by praying for cross-examination, convert Show Cause Notice proceedings into mini-trials. Persons seeking cross-examination ought to give specific reasons why cross-examination is needed in a particular situation and that too of specific witnesses. A blanket request to cross-examine all persons whose statements have been recorded by the Department... cannot be sustained..."

The Court thus emphasized several principles:

1. Cross-examination must be sought with specific reasoning; it should not be a blanket request covering all witnesses.
2. Not every statement recorded requires cross-examination—especially where the statements merely corroborate documentary evidence that is undisputed.
3. Authorities must consider the request fairly; if reasons are valid, limited cross-examination may be permitted.
4. Cross-examination can be granted selectively, i.e., in respect of certain witnesses and not all.

This effectively discourages dilatory tactics by parties who seek to prolong adjudications by demanding broad and unfocused cross-examination.

Instead of granting relief, the Court directed M/S Vallabh Textiles to avail the statutory appellate remedy under Section 107 of the CGST Act, 2017, highlighting that writ jurisdiction should not be invoked in such cases.

The Petitioner was permitted to file an appeal within thirty days, with assurance that the Appellate Authority would consider it on merits without dismissing it on the ground of limitation.

Statutory Framework Under the CGST Act, 2017

The Central Goods and Services Tax Act, 2017 ("CGST Act") governs the issuance of Show Cause Notices (SCNs), adjudication, and appeal mechanisms in GST matters.

Relevant Provisions:

1. Section 73 and Section 74: Pertains to determination of tax not paid, short paid, or erroneously refunded, with and without invocation of fraud or willful misstatement.
2. Section 107: Provides for appeal to the Appellate Authority against adjudication orders.
3. Section 75(4): States that an opportunity of being heard must be granted if requested by the person chargeable.
4. Principles of Natural Justice: Although not expressly detailed in the CGST Act, they are implicitly applicable to quasi-judicial proceedings under Articles 14 and 21 of the Constitution of India.

Cross-Examination:

1. The CGST Act does not specifically provide for cross-examination during adjudication under Section 73 or 74.
2. Rule 159(5) (relating to provisional attachment) mentions "opportunity of being heard" but again is silent about cross-examination.
3. General principle: Cross-examination flows from the doctrine of fair hearing when credibility of statements is challenged and prejudice is shown.

Conclusion

The judgment in M/S Vallabh Textiles is a notable addition to the jurisprudence on natural justice principles under GST law. It discourages blanket claims for cross-examination, streamlines GST adjudication proceedings, and reinforces the importance of following appellate remedies before approaching constitutional courts.

The decision serves as a reminder that while principles of natural justice are sacrosanct, they must be balanced against the need for efficient adjudication and avoidance of unnecessary procedural delays.