TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 874
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....n-shore supply of goods and on-shore supply of services for the power projects. It is the liability to service tax under the aforesaid contracts that forms the lis as between the petitioner and the respondent before me. I refrain from adverting to the taxability or otherwise of services rendered since this is a matter for assessment by the assessing authorities of the Service Tax Department. Suffice it to state that the Audit wing of the Central Board of Indirect Board Taxes and Customs (CBITC) had periodically audited the petitioner, two such audits being in January, 2016 and October/November, 2018. Differences of opinion appear to have been emerged from the audits conducted in regard to various issues, one of which related to the accounting methodology to be adopted for determining the taxability of the services rendered by the petitioner. The question raised hinged on whether the methodology to be adopted would be as per the Accounting Standards specified in the Company's (Accounting Standard Rules, 2006) and the Companies Act, 2013 (historically Accounting Standard 7 (AS-7)), or the specific Rules provided for this purpose, being the Point of Taxation Rules, 2011. 3. Be that ....
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....in the course of the Audit. 8. It is in the aforesaid circumstances that the petitioner is before the Court, contending mainly that no pre-consultation hearing has been conducted in the present case as mandated by several Circulars issued by the Board. Had such consultation been conducted, according to the petitioner there might well have been no necessity for a SCN which triggers the commencement of adversarial proceedings between the petitioner and the Department. 9. Heard Mr.Prasad for the petitioner, Mr.Syed Noorullah Sheriff for R1, R3 and R4 and Mr.Ravikumar for R2. 10. I have had occasion to deal with a similar issue in W.P.No.1618 of 2019 in the case of Freight Systems India (Pvt) Limited (order dated 28.02.2019) wherein I have held as follows: 8. The tenor of the Circulars / Instructions makes it clear that the introduction of the consultation process is as a measure to avoiding litigation. I refer to the Circulars / Instructions in some detail, since it is necessary to understand the purpose for which the process has been introduced. 9. In its Instructions dated 21.12.2015 the Board states as follows:- '5. Pre show cause notice consultation with the Principal....
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....h the assessee concerned shall be done by the Commissioner of show cause notice issuing authority / commissionerate. 4.0 In cases where the SCN issuing authority is from the Executive Commissionerate, the pre-SCN consultation shall be done by the concerned commissioner. 5.0 All cases of pre-SCN consultation which leads to closure of case without issuing of SCN, either in part or whole, the file shall be submitted to the relevant reviewing authority for case of such nature to keep the reviewing authority informed of the decision.' 12. Master Circular No.1053/02/2017-CX, dated 10.03.2017, deals with the subject of consultation process at paragraph 5 in the following terms:- '5.0 Consultation with the notice before issue of Show Cause Notice: Board has made pre show cause notice consultation by the Principal Commissioner / Commissioner prior to issue of show cause notice in cases involving demands of duty above Rs. 50 lakhs (except for preventive / offence related SCN's) mandatory vide instruction issued from F.No.1080/09/DLA/MISC/15, dated 21st December 2015. Such consultation shall be done by the adjudicating authority with the assessee concerned. This is an impo....
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....tes seek to prevent or resolve disputes.' 18. The obvious inference is that the consultation has to be between the assessee and the officer and prior to the stage of issuance of show cause notice. In fine, I conclude that the consultative process as envisaged by the Department mandates an opportunity of personal hearing with the Assessee, face to face, in order to make the process an effective one. The petitioner, in this case, has been denied this opportunity. 11.The discussions as above as well as the observations above apply on all fours to the present case, except that no opportunity was sought in that case for a personal hearing whereas, in the present case, the petitioner has sought an opportunity of personal hearing that has admittedly not been granted. 12.In addition, learned counsel also points to M.F.(D.R.) Office Memorandum F.No.296/51/2016-CX.9, dated 08.03.2016 wherein the Department monitors and reports upon the implementations of the Tax Administration Reform Commission (TARC) that was set up exclusively 'to review the application of Tax policies and Tax laws in the context of global best practices and to recommend measures for reforms required in tax adminis....