2021 (7) TMI 396 - HC - GST

Summons for Consultation Satisfies Pre-Consultation Requirement under Master Circular

The High Court of Orissa found that consultations held through summons issued to the Petitioner and its Director before the show cause notice satisfied ... Non-compliance with the requirement of holding the mandatory pre-SCN consultation in terms of the Master Circular dated 10th March 2017 of the Department of Revenue, Central Board of Excise and Customs - numerous summons issued but Department had not yet the issues or the demand to be raised in the SCN - HELD THAT:- The purpose of paragraph 5.0 of the Master Circular is only that there should be “trade facilitation” and “voluntary compliance” in order to reduce the necessity of issuing a SCN. At the stage where numerous summons were issued to the Petitioner and to its Director, the Department had not yet the issues or the demand to be raised in the SCN. In effect what appears to have transpired pursuant to the summons issued was a ‘consultation’ where the documents produced by the Petitioner/employees of the Petitioner were examined and questions were posed to the notices to explain many aspects of such documents. In the considered view of the Court, the requirement of there having to be a ‘consultation’ in terms of paragraph 5.0 of the Master Circular stands satisfied in the present case - the Court is therefore not inclined to interfere at the present stage of the SCN. Petition disposed off. Issues: Compliance with pre-show cause notice consultation requirement as per the Master Circular dated 10th March 2017.The judgment by the High Court of Orissa dealt with the grievance of the Petitioner regarding the impugned show cause notice (SCN) issued by the Directorate General of Goods and Service Tax Intelligence. The Petitioner contended that the mandatory pre-SCN consultation requirement, as per the Master Circular dated 10th March 2017, was not adhered to. The Petitioner relied on previous decisions to argue for setting aside the SCN and mandating a pre-SCN consultation. The Senior Standing Counsel for the Opposite Party highlighted that summons were issued to the Petitioner and its Director before the SCN, some of which were not responded to. The Petitioner's counsel pointed out the details in the SCN regarding questions posed and responses. The Court noted that the purpose of the Master Circular was to facilitate trade and voluntary compliance to reduce the necessity of issuing an SCN. It observed that the consultations held through the summons issuance satisfied the requirement of a pre-SCN consultation as per the Master Circular. The Court declined to interfere at that stage and allowed the Petitioner to respond to the SCN by extending the time limit. The writ petition was disposed of accordingly. Additionally, due to COVID-19 restrictions, the parties were permitted to use a printout of the order from the High Court's website as a certified copy, subject to attestation by the concerned advocate.In conclusion, the High Court of Orissa found that the consultations held through the summons issued to the Petitioner and its Director before the show cause notice satisfied the requirement of a pre-SCN consultation as per the Master Circular. The Court emphasized the purpose of the Circular to facilitate trade and voluntary compliance. As a result, the Court declined to interfere at that stage and allowed the Petitioner to respond to the SCN within an extended timeline. The judgment highlighted the importance of complying with procedural requirements while also considering the practical aspects of the case.