Mandatory pre-consultation before tax notices applies even where extended limitation is proposed under central excise law

Binding CBIC circulars require pre-consultation before issuing show cause notices or passing orders-in-original under central excise and allied tax laws, and that step is not a mere formality. The Department cannot omit pre-consultation simply because it proposes to invoke extended limitation, as allegations of fraud, suppression, wilful misstatement, or intent to evade duty remain disputed factual matters requiring evidence. The pre-consultative mechanism is part of trade facilitation and alternative dispute resolution, subject only to recognised exceptions in the circulars. Without compliance, the impugned notices and assessment orders could not be sustained.

---

---

Issues: Whether pre-consultation before issuing show cause notices or passing orders-in-original under the central excise and allied tax regime is mandatory, including in cases where extended limitation is invoked.

Analysis: The Court treated the CBIC master circulars as binding on the Department and followed the consistent view of other High Courts that pre-consultation is not an empty formality but a required step before adversarial adjudication is initiated. It also held that the Department cannot carve out a unilateral exception merely because it proposes to invoke the extended period of limitation, since the existence of fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty is itself a matter requiring evidence and is open to dispute by the assessee. The Court further noted that the pre-consultative mechanism serves the purpose of trade facilitation and alternate dispute resolution and must be given effect to across the board, subject only to the exceptions recognised in the circulars.

Conclusion: Pre-consultation is mandatory, and the impugned show cause notices and assessment orders could not be sustained without following that process.

Ratio Decidendi: Where a binding departmental circular prescribes pre-consultation before issuance of a tax notice, the authority must comply with that requirement unless a recognised exception is established; the mere proposed invocation of extended limitation does not dispense with the mandatory pre-consultative process.

---