2022 (2) TMI 959 - HC - Service Tax

Dismissal of Writ Petition Over Show Cause Notice Without Pre-Consultation

Brilliant Corporate Services Private Limited, (Now known as M/s. Brivas Private Limited) Versus The Commissioner, Office of the Commissioner of GST and Central Excise

The High Court dismissed the writ petition challenging a show cause notice issued to multiple individuals without pre-consultation as required by CBEC ... Validity of SCN - SCN was issued to five different persons merely on the ground that the registered premises of each of the co-noticees are having common directors and partners and that it has been issued without pre-consultation - CBEC Water Circular Dated 10.03.2017 - HELD THAT:- The aforementioned Master Circular is intended to only facilitate the parties to come forward to pay the amount so that the department is not burdened with show cause proceedings. However, by that itself would not impugned show cause proceedings initiated against the petitioner would be either illegal or without jurisdiction. The show cause proceedings initiated under Section 73 of the Finance Act, 1994 seeking to demand tax which was allegedly not paid, show cause proceedings cannot be allowed to be scuttled in the light of the above circular. In any event circulars are not binding on the Courts as per the decision of the Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING & WIRE INDUSTRIES [2008 (10) TMI 5 - SUPREME COURT]. There are no merits in the present writ petition as the impugned show cause notice has been issued a competent authority namely The Commissioner, Office of the Commissioner of GST and Central Excise, Chennai Outer Commissionerate under the Finance Act, 1994. The respective noticees can file their reply to the impugned show cause notice and meet out the allegations on merits - petition dismissed. Issues:Challenge to show cause notice based on lack of pre-consultation as per CBEC Water Circular Dated 10.03.2017.Analysis:The petitioner challenged the show cause notice dated 23.10.2019 on the basis that it was issued to multiple individuals due to common directors and partners without pre-consultation as required by CBEC Water Circular. The petitioner argued that the notice contradicted CBEC Master Circular No.1053/2/2017-CX, which mandates pre-consultation for amounts exceeding 50 lakhs. The petitioner cited previous court decisions such as TUBE INVESTMENT OF INDIA LTD. Vs. UNION OF INDIA and HITACHI POWER EUROPE GMBH Vs. C.B.I. & C, supporting the requirement of pre-consultation. Additionally, reference was made to the decision of the Delhi High Court in AMADEUS INDIA PVT.LTD. Vs. PR.COMMR.OF C.EX., S.T. & CENTRAL TAX and BACK OFFICE IT SOLUTIONS PVT. LTD Vs. UNION OF INDIA & ORS., further strengthening the argument to quash the impugned notice.The High Court considered the arguments presented and noted that the impugned show cause notice was issued to all co-noticees based on a combined demand for service tax. The Court highlighted that the circulars referred to by the petitioner were not binding on the Court and were not envisaged under the Finance Act, 1994. The Court emphasized that the purpose of the Master Circular was to encourage parties to pay outstanding amounts to avoid lengthy proceedings, but this did not render the show cause proceedings illegal or without jurisdiction. Citing the decision of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE Vs. RATTAN MELTING AND WIRE INDUSTRIES, the Court affirmed that circulars are not binding on the Courts. The Court concluded that the impugned show cause notice was issued by a competent authority under the Finance Act, 1994, and directed the noticees to respond to the allegations on merit.In light of the above analysis, the Court declined to interfere with the show cause proceedings and dismissed the writ petition, instructing the noticees to file their individual replies to the show cause notices. The Court ruled that there would be no order as to costs in this matter.