Appellate Authority's power to conduct inquiry under Section 107(11) CGST Act includes permitting cross-examination of witnesses.

The Petitioner had earlier preferred two Writ Petitions, both of which were disposed of by relegating it to the statutory remedy of appeal under Section 107 of the Central Goods and Services Tax Act, 2017 ('CGST Act').

Through the present Writ Petition, the Petitioner sought quashing of the order dated 03.02.2025 passed by the Additional Commissioner (Adjudication), CGST, Delhi ('Impugned Order'), whereby a demand of approximately Rs.64 crores was raised on the conclusion that the Petitioner had wrongly availed Input Tax Credit ('ITC') on the basis of fake invoices.

The Petitioner contended that it was denied the opportunity to cross-examine witnesses during the adjudication proceedings, and that the Appellate Authority, lacking remand powers under Section 107(11), could not cure this defect.

The Petitioner further submitted that it had already deposited a sum of Rs.64 crores, which was not duly considered by the Adjudicating Authority.

1. Whether a Writ Petition under Article 226 of the Constitution of India is maintainable against the adjudication order, notwithstanding the availability of the statutory appellate remedy under Section 107 of the CGST Act, on the ground of denial of cross-examination.

2. Whether the Appellate Authority, despite having no power of remand under Section 107(11) of the CGST Act, is competent to cure the procedural defect of denial of cross-examination and adjudicate both factual and legal issues arising from the Impugned Order.

3. Whether the Petitioner's contention regarding the prior deposit of Rs.64 crores warrants interference by the writ court.

Section 107(11) of the CGST Act, which provides that the Appellate Authority "shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority".

The settled principle governing the exercise of extraordinary jurisdiction under Article 226 of the Constitution of India, namely that writ jurisdiction ought not to be exercised where an effective alternative statutory remedy is available.

Section 14 of the Limitation Act, 1963, which permits exclusion of time spent prosecuting proceedings before a wrong forum, as a safeguard for the Petitioner's appellate rights.

Applying Section 107(11) to the Petitioner's first grievance, the Court held that a plain reading of the provision demonstrates that although the Appellate Authority cannot remand the matter to the Adjudicating Authority, it is expressly empowered to undertake "such further inquiry as may be necessary" before deciding the appeal.

This power is sufficiently wide to enable the Appellate Authority, in an appropriate case, to permit cross-examination of witnesses wherever it considers the same necessary for just adjudication.

The Court further reasoned that the Appellate Authority, as the first appellate forum, exercises wide appellate powers to confirm, modify, or annul the order under challenge, and is therefore competent to examine both factual and legal issues arising from the Impugned Order, including the grievance relating to denial of cross-examination.

On the second submission, the Court noted that the Impugned Order itself records consideration of the Petitioner's contention regarding the payment of Rs.64 crores, and in any event, the Appellate Authority is fully competent to re-examine that issue in appeal.

Consequently, since the statutory appellate mechanism was adequate to redress all of the Petitioner's grievances, the Court declined to entertain the Writ Petition under Article 226.

The Petitioner was granted liberty to file an appropriate application under Section 14 of the Limitation Act, 1963, seeking exclusion of the period during which the present Writ Petition remained pending, for the purposes of limitation. With these observations, the Writ Petition was disposed of and the pending application stood closed.