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2021 (12) TMI 524 - HC - VAT and Sales TaxRight to cross-examine - whether the imposition of penalty subsequent to and by referring to the statement/material/Books recovered on 13.09.2010 from the house of K. Ravindran and in the circumstances of these cases, whether the right of the dealer to cross-examine K.Ravindran is tenable or not? - HELD THAT:- The Revenue has categorized the recoveries of books under the 3 categories: 1) from Mrs.Rekha Pharmaceuticals, Palakkad, 2) from the residence of the proprietrix of the registered dealer, 3) from Mr.K.Ravindran from Palakkad, an employee of the dealer. The analysis in the show-cause notice refers to the books of account recovered from the house of Ravindran. Variation between the figures shown in the returns filed by the dealer and the details noticed from the books of accounts recovered from the house of Ravindran constituted the basis for penalty proceedings. The reply of the dealer is excerpted above and on material facts and accusations made against the dealer, the dealer has not only denied the veracity of the statement and books of account relied on by the Revenue but requested an opportunity of cross-examination if the Revenue desires to proceed on the statement of Ravindran or the books of account recovered from the house of Ravindran. The order dated 10.03.2014 in Annexure-D imposes a penalty by completely accepting details noted from the books of account recovered from the house of Ravindran. The broad test in matters of present nature is the nature of the interest affected by the decision, and whether the decision relates to the imposition of a detriment on an individual e.g. penalty, sanction or cancellation, then the requirement to follow minimum procedure while making such decision is required. The paradigm situation in which the duty to act fairly will apply, is where a decision-maker is taking a decision that will or may have an adverse impact on the dealer. Ultimately the right is dependant on nature of the proceeding, or of the function exercised; the conduct of the party and the circumstances of the case. So now we have to examine whether the circumstances of the case are persuasive enough to consider whether the denial of right to cross examine Ravindran has resulted in prejudice to the Dealer. The crucial aspect of the matter at this stage is, these books have been recovered behind the back of the dealer. On this either aspect, the argument of Mr. Anil D Nair is contextual to be noted to wit that there is no prohibition for the Revenue to collect or gather information against the dealer, but any material relied on by the Department must be put to the dealer and if the material is contested, the semblance of fair play and procedure are followed before accepting material gathered behind the back of the dealer as constituting the basis for imposition of penalty. The test here is not only the procedural impropriety but the real prejudice in accepting extraneous and other relevant material constituting the basis for imposing penalty. We are not convinced with the reasoning recorded by the Tribunal. We appreciate the objection raised by Mr. Muhammed Raffiq that the Appellate Authority, if had a reason to hold in the case on hand that the denial of the right of cross-examination resulted in prejudice to the dealer, the Appellate Authority ought to have remitted the matter to the Intelligence Officer for disposal afresh. Therefore, allowing the appeal in its entirety on merits, in our view by the Appellate Authority is equally unsustainable and illegal. The matter remitted to the Intelligence Officer for consideration and disposal afresh in accordance with law - Appeal disposed off.
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