Pre-show-cause consultation is only an administrative guideline, but adjudication without considering reply and evidence requires remand.

A Board circular requiring a pre-show-cause discussion with a PSU was treated as an administrative guideline only; non-compliance did not by itself invalidate a statutory show cause notice or nullify the proceedings. However, where the adjudication was completed without considering the appellant's reply and supporting evidence, and without affording a reasonable opportunity of hearing, fairness required reopening the matter. The demand order was therefore not sustained on merits, and the dispute was remanded for de novo adjudication after permitting the appellant to file its reply, evidence, and be heard afresh.

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Issues: (i) Whether non-compliance with the Board's circular prescribing a pre-show-cause discussion with the PSU vitiated the show cause notice; (ii) whether the adjudication order had to be set aside and remanded because the reply and evidence of the appellant were not considered and reasonable opportunity was not afforded.

Issue (i): Whether non-compliance with the Board's circular prescribing a pre-show-cause discussion with the PSU vitiated the show cause notice.

Analysis: The circular was only an administrative guideline intended to explore settlement of disputes before issuance of a notice. Once a show cause notice had already been issued under the statute, failure to follow the circular could not by itself invalidate the notice or nullify the proceedings.

Conclusion: The issue was decided against the appellant.

Issue (ii): Whether the adjudication order had to be set aside and remanded because the reply and evidence of the appellant were not considered and reasonable opportunity was not afforded.

Analysis: The appellant had not filed its reply before adjudication was completed, and the Commissioner proceeded to confirm the demand without awaiting the reply. In these circumstances, fairness required that the matter be reopened so that the reply, supporting evidence, and oral hearing could be considered afresh.

Conclusion: The issue was decided in favour of the appellant and the matter was remanded for fresh adjudication.

Final Conclusion: The demand order was not sustained, but the dispute was sent back for de novo consideration after permitting the appellant to file its reply and evidence.

Ratio Decidendi: An administrative circular meant to facilitate pre-notice consultation does not, by itself, vitiate a statutory show cause notice, but an adjudication completed without considering the assessee's reply and affording reasonable opportunity of hearing cannot be sustained and must be remanded.

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