2017 (1) TMI 761 - HC - Service Tax

Court upholds show-cause notice challenge under Cenvat Credit Rules & Finance Act despite lacking specifics.

The court upheld the show-cause notice challenged by the petitioner under Cenvat Credit Rules and the Finance Act, finding it legally issued despite ... Natural justice - validity of SCN - SCN came to be issued ignoring various communications made between the parties for the past four years - whether the show-cause notice, on the face of it, is illegal warranting interference by this Court? - Held that: - this Court is of the view that the contention of the learned senior counsel appearing for the petitioner that the show-cause notice lacks material particulars, cannot be accepted. Whether such reasonings stated in the show-cause notice are correct or not, is for the adjudicating authority to finally determine, after considering the objections to be filed by the petitioner while passing the order in original, of course by giving due opportunity of hearing to the petitioner - any view expressed in the show cause notice or opinion formed therein against the petitioner, is only a prima facie view or opinion of the authority and not the final conclusion itself. After all, it is only calling upon the petitioner to show cause. Absolutely no prejudice would be caused to the petitioner if they reply to the show cause notice. At this stage, this Court cannot get into the shoes of the adjudicating authority and find out as to whether the particulars furnished in the show cause notice would necessarily warrant the petitioner to show cause or not. The petitioner can not seek blanket relief preventing the competent authority from exercising his statutory power or discharging his duties and functions vested under the statue. Petition dismissed - petitioner given liberty to file explanation to SCN - decided against petitioner. Issues:1. Challenge against a show-cause notice for disallowance and recovery under Cenvat Credit Rules and Finance Act.2. Seeking direction to prevent issuance of show-cause notices for specific years.Analysis:Issue 1: Challenge against show-cause noticeThe petitioner challenged a show-cause notice seeking disallowance and recovery under Cenvat Credit Rules and the Finance Act. The petitioner argued that there was a violation of natural justice and an error apparent on the face of the record. The petitioner contended that the notice lacked material particulars necessary for a response. However, the court found that the authority issuing the notice had jurisdiction, and the notice itself did not appear to be illegal. The notice detailed the alleged discrepancies in availing Cenvat credit on input services. The court emphasized that the adjudicating authority should determine the facts and decide on the validity of the notice after considering the petitioner's objections and materials. The court held that challenging a show-cause notice through a writ petition was not appropriate when statutory remedies were available. The court referred to previous decisions emphasizing the availability of alternative remedies in fiscal matters.Issue 2: Seeking direction to prevent future show-cause noticesThe petitioner also sought a direction to prevent the issuance of show-cause notices for specific years. The court held that such a blanket relief preventing the competent authority from exercising statutory powers was not permissible. The court ruled that the prayer to prevent future notices could not be entertained. Both writ petitions were dismissed as not maintainable, but the petitioner was given the opportunity to file an explanation to the show-cause notice within a specified period. The adjudicating authority was directed to pass orders after providing a personal hearing to the petitioner, following due process and in accordance with the law. The court concluded by stating that the connected miscellaneous petitions were closed, and no costs were awarded.