2024 (4) TMI 1330 - HC - Service Tax

Show-cause notice set aside for failing pre-consultation; matter returned for mandated consultation before any reissued notice

HC found breach of natural justice for failure to carry out pre-consultation before issuing the impugned show cause notice and allowed the petition, ... Violation of principles of natural justice - before the order was passed, there was no pre-consultation - HELD THAT:- The Division Bench of the Hon’ble High Court of Delhi in Amadeus India Pvt. Ltd. Vs. Principal Commissioner, Central Excise, Service Tax and Central Tax Commissionerate [2019 (5) TMI 669 - DELHI HIGH COURT] without expressing any view on the merits of the case relegated the parties to the stage prior to the issuance of the impugned show cause notice so as to carry out the consultation as prescribed by the Central Board of Excise and Customs. The matter is pending before the Hon’ble Supreme Court but however the Hon’ble Supreme Court was also of the opinion that the proceedings should be completed by relegating the parties to the stage at which the consultation has to be carried out. It has also been specified that after consultation, a show cause notice could be issued. Any limitation as per the statute will not restrict the Department from issuing such a show cause notice. Hence the very same method adopted and the parties are relegated to the consultation stage - No observation made on the merits of the matter including the issue of exemption prayed for by the petitioner, which will have to be considered on the terms of the notification issued as also the facts coming out insofar as the contracts executed by the petitioner-assessee. Petition allowed. Petitioner, a works contractor for public roads/bridges, challenged adjudication for AY 2015-16 and 2016-17 asserting absence of pre-consultation mandated by the CBEC Master Circular (Show Cause Notice, Adjudication and Recovery, 10.03.2017), para 5. Petitioner also relied on a notification exempting 'services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a road, bridge, tunnel, or terminal for road transportation for use by general public.' A Division Bench decision relegated parties to the stage prior to issuance of the impugned show cause notice so consultation could be carried out; a Special Leave Petition was admitted with the order: 'Delay condoned. Learned Additional Solicitor General submits that if a fresh show cause notice is to be issued as directed by the High Court after preconsultation, the Department may be given liberty to revive the earlier show cause notice to obviate any objection in regard to limitation. Issue notice confined to the above issue, returnable in eight weeks.' Court adopted that method, relegating parties to pre-show-cause consultation, expressly making no merits observation and holding that limitation will not bar issuance of a show cause notice after consultation.