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2025 (10) TMI 68
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....THNA, JJ. For the Petitioner: Mr. Prithiviraj Choudhary a/w Mr. Ankit Trivedi, Ms. Kausar Jahan Sayed i/b Vashi Assocaites for the Petition in WP/1822/2021. For the Petitioner: Mr. Bharat Raichandani a/w Mr. Mahesh Raichandani, Ms. Dhanishta Kawale i/b UBR Legal, in WP/1466/2021, WP/1449/2021, WP/1714/2021 and WP/5375/2022. For the Petitioner: Mr. Prakash Shah, Senior Advocate a/w Mr. Mihir Mehta, Mr. Mohit Raval i/b PDS Legal, in WP/822/2021, 825/2021. For the Respondent: Ms. Maya Majumdar a/w Mr. Saket Ketkar, in WP/825/2021. For the Respondent: Mr. J. B. Mishra a/w Ms. Maya Majumdar, Mr. Rupesh Dubey, in WP/5375/2022. For the Respondent: Mr. Satyaprakash Sharma a/w Ms. Sangeeta Yadav, Mr. Harpreet Kaur, in WP/822/2021. For the Respondent: Mr. J. B. Mishra a/w Mr. Dhananjay B. Deshmukh, Ms. Sangeeta Yadav, Mr. Rupesh Dubey, in WP/1466/2021. For the Respondent: Mr. J. B. Mishra a/w Mr. Dhananjay B. Deshmukh, Mr. Abhishek Mishra, Mr. Rupesh Dubey, in WP/1822/2021. For the Respondent: Mr. J. B. Mishra a/w Ms. Mamta Omle, Mr. Rupesh Dubey, in WP/1449/2021. For the Respondent: Mr. J. B. Mishra a/w Mr. Dhananjay B. Deshmukh, Mr. Abhishek Mishra, Ms. Mamta ....
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.... Commissionerate Versus Amadeus India Pvt. Ltd., M/s. Excellency Service Versus Union of India, DHR Holding India Pvt. Ltd. Versus Union of India, Back Office IT Solutions Pvt. Ltd. Versus Union of India, Yaduka Agrotech Pvt. Ltd. Versus Commissioner of CGST, The Commissioner of CGST, Kolkata Audit -I, Commissionerate vs. M/s. Saumya Agrotech Private Limited & Ors., M/s. Victory Electric Vehicles International Pvt. Ltd. Vs. Union of India & Anr., L and T Hydrocarbon Engineering Ltd. Vs. Union of India, Commissioner of Central Excise Versus Ratan Melting and Wire Industries, Union of India Versus Garware Nylons Ltd., Hindustan Ferodo Ltd. Versus Collector of Central Excise, Bombay, Nanya Imports & Exports Enterprises Versus Commr. of Cus. Chennai, Chairman, Board of Mining Examination and Chief Inspector of Mines versus Ramjee, Union of India Versus Bajaj Tempo Limited, B P L Ltd. Versus State of Madhya Pradesh, K. P.Varghese v. Income-tax Officer, Raza Textiles Ltd. Versus Income Tax Officer, Rampur, ITW Signode India Ltd. Versus Collector of Central Tax, Phoenix Mills Ltd. Versus Union of India, Alpa Management Consultants P. Ltd. Versus Commr. of S.T. Bangalore, Commr. of S.T. Ba....
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....tion and operation of the impugned Show Causes Notices is stayed." 4. The main issue involved in all these Petitions is whether a pre-consultation notice would be mandatory, before the impugned show cause notices which are the subject matter of these Petitions were issued, given the provisions of Section 73 of the Finance Act, 1994, read with Circular No. 1053/02/2017-CX-dated 10 March 2017 [Master Circular] and Circular No. 1076/02/2020-CX-dated 19 November 2020. 5. In all these matters, there is no dispute that a pre-consultation notice was never issued. However, the Revenue argues that issuing a pre-consultation was not a mandatory requirement, and failing to issue such a notice does not make the impugned show cause notices invalid. 6. Section 73 of the Finance Act, 1994, does not refer to the issue of any pre-consultation notice. However, the Central Board of Excise and Customs, New Delhi ("CBEC") issued Circular No. 1053/02/2017-Cx-dated 10 March 2017 [Master Circular] consolidating the Circulars issued from time to time regarding show cause notices, adjudication and recovery proceedings. 7. Clause 5.0 of this Master Circular dated 10 March 2017 is relevant and the....
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....har, J. (as His Lordship then was) and Prateek Jalan, J., was concerned with the precise issue as to whether a pre notice consultation with the Assessee in terms of paragraph 5 of the Master Circular dated 10 March 2017 (Master Circular) issued by the CBEC was a mandatory requirement. The Delhi High Court held that such a requirement was mandatory and traced the mandatory character of the Master Circular to Section 83 of the Finance Act, 1994, which makes Section 37B of the Central Excise Act, 1944, applicable in relation to service tax. The Court noted that in terms of Section 37B of the Central Excise Act, 1944, instructions issued by the CBEC would be binding on the officers of the department. 11. The Delhi High Court referred to the Supreme Court's decision in the case of State of Tamil Nadu vs India Cements Limited 2011 (13) SCC 247 to hold that such Circulars and instructions are binding upon the department. Specific to the Master Circular dated 10 March 2017, the Delhi High Court referred to the decision of the Madras High Court in Tube Investment of India Ltd. Vs Union of India And Ors. 2019 (69) GSTR 78 (Mad.), in which, after noticing that paragraph 5 of the Master Cir....
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....rch 2017. The Court held that such consultation, mandated by the Master Circular, was an important step towards trade facilitation, promoting voluntary compliance and reducing the necessity of issuing a show cause notice. The impugned show cause notice was set aside, and the Revenue was directed to pay the cost of Rs. 20,000/-. 16. Another Division Bench of the Gujarat High Court, comprising Bhargav D. Karia and D. N. Ray, JJ., in the case of Jay Mahakali Industrial Services Vs Union of India 2025 (393) E.L.T. 28 (Guj.), has held that a pre-consultation notice was mandatory and a show-cause notice issued without complying with these mandatory requirements was vulnerable. 17. In Tube Investment of India Ltd. (supra), the learned Single Judge of the Madras High Court, in the precise context of paragraph 5 of the Master Circular dated 10 March 2017, held that issuance of a pre-consultation show cause notice was mandatory, and the show cause notice issued without compliance with such mandatory requirement was liable to be quashed. 18. In Hitachi Power Europe GMBH Project Office, Represented by its Commercial Manager Vs Central Board of Indirect taxes and Customs And Ors. 2019 ....
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....2025) 144 GSTR 576, and Tata Teleservices Limited Vs Commissioner of CGST Delhi East And Anr. 2025 SCC OnLine Del 1374. He also relied on Ruchi Soya Industries Ltd. Vs Union of India And Anr. (2021) 17 GSTR-OL 346, in support of his contention that the Master Circular was not binding on the department or in any event, the requirement of pre-consultation notice was not a mandatory requirement. 22. In the context of the argument based on the order dated 04 November 2019 issued by the Hon'ble Supreme Court in the SLP challenging the decision of the Delhi High Court in the case of Amadeus India Pvt. Ltd. (supra), the Co-ordinate Bench of this Court, in its order dated 30 January 2023, while issuing a rule in these petitions, made a prima facie observation that the limited argument presented by the Revenue in its SLP appeared to be restricted to issues of limitation that would arise if the impugned show cause notices were quashed. The Co-ordinate Bench also expressed a prima facie view that this suggested the Revenue had implicitly accepted the mandatory nature of a pre-consultation notice. 23. Furthermore, from a reading of the Hon'ble Supreme Court's order dated 04 November 2019....
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....atory in certain circumstances but a bare reading of the Circular referred to would show that the pre-consultation notice is not mandatory for the cases booked under fraud, collusion, wilful mis-statement, suppression of facts, evasion of tax, etc. This means that a pre-show cause notice would be mandatory in cases where no issue of fraud, collusion, willful misstatement, suppression of facts or evasion of tax is involved. 28. In Singh Caterers and Vendors (supra) it is not as if the Patna High Court has dissented from the view taken by the Delhi High Court in the case of Amadeus India Pvt. Ltd. (supra). In paragraph 24, the Patna High Court has merely distinguished this decision by pointing out that there was no challenge to the show cause notice. Significantly, the Petitioner, without raising any objection regarding the pre-consultation notice, requested the adjudicating authority to decide the case on its merits. 29. Therefore, neither of the decisions by the Patna High Court serves as authority for the proposition that a pre-show cause consultation is unnecessary or that it is not a mandatory requirement. It is well established that even a mandatory requirement made for t....
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.... per incuriam or sub silentio for simply being overlooked. No reference was made to any larger bench for an authoritative ruling on the matter. 34. Secondly, the decision has not taken into account the decisions of the Hon'ble Supreme Court in the cases of K P Varghese (supra), Indian Oil Corpn Ltd (supra), and Arviva Industries India Limited (supra), which hold that Circulars issued by the CBDT, CBEC, or CBIC are binding upon the department. The issue involved was not whether CBEC Circulars bind the Courts. Of course, they do not. However, the issue involved was whether the CBEC Circulars bind the department and whether the department could have acted in breach of the directions or instructions contained in such Circulars. 35. Thirdly, the issue in Ratan Melting & Wire Industries (supra) was whether the law established by the Hon'ble Supreme Court would take precedence over the Board's circulars. The Hon'ble Supreme Court held that applying a Circular from the State or Central Government instead of a precedent set by the High Court or the Supreme Court was not appropriate. Ratan Melting & Wire Industries (supra) thus serves as an authority for the principle that the prec....
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.... shall be accorded a personal hearing and the matter shall be discussed at length. The Hon'ble Supreme Court held that, in view of such directions, it was satisfied that there was substantial compliance with the principle of natural justice and the Petitioner had sufficient opportunities to satisfy the authorities that there was no reason to proceed against it based on the show cause notice, which was issued without a pre-consultation process. With these observations, the Special Leave Petition was disposed of. 40. From the above, it is apparent that the decision in the case of Yaduka Agrotech Pvt. Ltd. (supra) turned on facts which were peculiar to the said matter. These peculiar facts were taken note of by the Hon'ble Supreme Court, and it was only in view of those peculiar facts that the decision of the Calcutta High Court was not interfered with. Such peculiar facts are not found in any of the cases before us in this batch of Petitions. The order relied upon by Mr Mishra does not suggest that the Hon'ble Supreme Court has taken the view that a pre-consultation notice was not mandatory. 41. The requirement of a pre-consultative process cannot be dismissed as some empty for....
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....ed from contending that the show-cause notices or pre-consultative notices were already barred at the time of their issue or that the time for disposal had expired, even after excluding such periods. 45. As noted earlier, by our interim order dated January 30, 2023, we had stayed further proceedings in pursuance of the impugned show cause notices. Therefore, it would not be appropriate to count the period between 30 January 2023 and the date of quashing of the impugned show cause notices, i.e., the date of disposal of these Petitions, for the purposes of limitation for either issuance of show cause notices or completion of their adjudication. 46. Similarly, suppose a pre-consultation process needs to be initiated. In that case, the time spent on this process should not be counted for the purpose of determining the limitation for issuing a show-cause notice or completing its adjudication. The Revenue cannot be prejudiced during the abovementioned periods when, in practice, its hands were tied due to interim orders made by this Court or because of the Court's directives to adhere to the pre-consultation process. 47. In the above context, useful reference could be made to....
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....ile passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case..." 11. In view of the above, without expressing any opinion on the merits of the demand raised in the impugned show-cause notice, the court hereby sets aside the impugned notice dated April 12, 2019 (annexure D) on the ground that the petitioners were not granted an adequate opportunity for the consultation prior to the issuance of the said notice. The parties are relegated to the stage prior to the issuance of the impugned show-cause notice. Respondent No.2 will now issue afresh pre-show-cause notice for consultation in view of the circular dated March 10, 2017 giving the petitioner a reasonable opportunity of making effective consultation, and the respondent No.2 shall issue the show-cause notice only on having been satisfied for issuance of the same. It is clarified that the petitioner shall extend full co-operation to the respondent-authority by providing necessary information that may be asked for and shall not raise the issue of limitation in respect of the demand, if made, by the respondent-authority, as the action of raising demand was taken by ....