Voluntary statements before Senior Intelligence Officer not valid pre-show cause consultation under para 5, 2017 Master Circular

HC held that voluntary statements recorded before the Senior Intelligence Officer cannot be treated as pre-show cause notice consultation under paragraph 5 of the 2017 Master Circular, as consultation requires a two-way discussion and deliberation, not a one-sided statement before a non-decisional authority. Consequently, the authorities were directed to issue an appropriate communication to the petitioner, specifying date, time, and venue for a proper pre-show cause notice consultation meeting. With this direction, the writ petitions were disposed of, leaving further action to follow due consultative process.

---

---

Issues:
Applicability of the instruction dated 21.12.2015 and the Master Circular dated 10.03.2017 issued by the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Government of India, particularly relying on paragraph 5 of the 2017 Master Circular.

Analysis:
The limited issue in the writ petitions revolves around the interpretation and applicability of the instruction dated 21.12.2015 and the Master Circular dated 10.03.2017 issued by the Central Board of Excise & Customs. The petitioners argue that as per paragraph 5 of the 2017 Master Circular, the respondents were obligated to hold pre-show cause notice consultation with the petitioners before initiating proceedings under the Finance Act, 1994. This contention is supported by a judgment of a coordinate bench of the court. On the other hand, the respondents claim that the consultative process did take place, citing voluntary statements provided by the petitioners' officials. The crux of the matter lies in whether the mandatory requirement of pre-show cause notice consultation was fulfilled in these cases.

The court heard arguments from both sides and delved into the issue concerning the applicability of paragraph 5 of the 2017 Master Circular. This issue had also arisen in a previous case listed before the court. In that case, directions were given for pre-show cause notice consultation based on the mandate of the Master Circular. The court disagreed with the respondents' defense in that case and issued specific directions. In the present writ petitions, the respondents claimed that pre-show cause notice consultation had taken place based on voluntary statements made by the petitioners' officials. However, the court opined that voluntary statements before the Senior Intelligence Officer did not meet the criteria of pre-show cause notice consultation as envisioned in the Master Circular. The court emphasized that consultation involves discussion and deliberation, which was lacking in this scenario.

Consequently, the court decided to dispose of the writ petitions by issuing directions similar to those in the previous case. The directions included the requirement for the respondents to communicate a meeting for pre-show cause notice consultation, provide a personal hearing to the petitioner's representative, allow submissions on the merits of the matter, and make a decision on whether to continue with the proceedings. If continuation was deemed necessary, a decision on the show cause notice was to be made in line with a pending judgment. The court concluded by disposing of the writ petitions in accordance with the outlined directions, thereby closing the pending applications as well.

---