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<h1>Court sets aside show cause notice, orders pre-notice consultation, writ petition allowed</h1> <h3>Hitachi Power Europe GmbH Project Office Versus Central Board of Indirect taxes and Customs, Senior Audit Officer/CERA Party V 361 Anna Salai, Assistant Commissioner of Service Tax, The Prinicipal Commissioner of CGST and Central Excise</h3> Hitachi Power Europe GmbH Project Office Versus Central Board of Indirect taxes and Customs, Senior Audit Officer/CERA Party V 361 Anna Salai, Assistant ... Issues Involved:1. Liability to service tax under contracts for on-shore supply of goods and services.2. Procedural adherence by the authorities in conducting audits and issuing show cause notices (SCNs).3. Requirement and implementation of pre-show cause notice (pre-SCN) consultation.Detailed Analysis:1. Liability to Service Tax:The petitioner, a German company with a branch office in Chennai, is an approved vendor for power projects and is liable to service tax. The dispute centers around the service tax liability under contracts for on-shore supply of goods and services. The petitioner had been audited by the Central Board of Indirect Taxes and Customs (CBITC) in January 2016 and October/November 2018, with differences arising regarding the accounting methodology for determining taxability. However, the court refrains from addressing the taxability of services rendered, as this is a matter for the Service Tax Department's assessing authorities.2. Procedural Adherence by Authorities:The procedural trajectory began with an intimation for a service tax audit on 25.09.2015, followed by a notice on 16.06.2016 for the petitioner to prepare documents for the audit conducted from 16.06.2016 to 21.06.2016. Subsequently, on 20.07.2016, the Assistant Commissioner of Service Tax issued a letter referring to audit slips and requesting the petitioner to deposit service tax due. The petitioner responded on 06.10.2016, seeking a personal hearing. Further notices and communications ensued, culminating in the impugned SCN dated 11.10.2018. The SCN lacked reference to the prior communications and details provided by the petitioner during the audit.3. Requirement and Implementation of Pre-SCN Consultation:The petitioner contended that no pre-SCN consultation was conducted as mandated by several Board Circulars, which aim to avoid litigation by facilitating dispute resolution through consultation. The court referenced a similar case (W.P.No.1618 of 2019) and several Circulars and Instructions, emphasizing that pre-SCN consultation is mandatory for demands above Rs. 50 lakhs, except for preventive/offence-related SCNs. The consultation process is intended to promote voluntary compliance and reduce the necessity of issuing SCNs. The court concluded that the consultation should involve a face-to-face meeting between the assessee and the adjudicating authority, which was not afforded to the petitioner in this case.Conclusion:The court set aside the impugned SCN dated 11.10.2018, directing the respondents to provide the petitioner with a full opportunity for pre-SCN consultation before issuing any SCN if deemed necessary. The writ petition was allowed, with no order as to costs, and the connected WMP was closed.