The Calcutta High Court has recently ruled that the circular issued by the Central Board of Indirect taxes and Customs (CBIC) excluding the requirement of pre-show cause notice is directory and discretionary and the principles of natural justice shall be followed.
The petitioner, Jagdish Das, has challenged the impugned show-cause-cum-demand notice dated 23rd April, 2021 issued by the CGST Authority concerned on the ground that the same was issued without issuing pre-show-cause notice consultation as per Circular No.1076/02/2020 CX dated 19th November, 2020 issued by the Central Board of Indirect Taxes and Customs, relating to high pitch assessment involving due above Rs.50 lakhs and admittedly in this case the demand involved is about 50 lakhs, and it is mandatory as per Clause 5 of the said Circular dated 19th November, 2020 to issue pre-show-cause notice consultation.
The Revenue contended that subsequent Circular issued by the Board dated 11th November, 2021 according to which pre-show-cause notice consultation is not mandatory.
Justice Md. Nizamuddin found that “though the said pre-show cause notice consultation to the noticee is not mandatory but it does not wholly exclude issuance of notice of pre-show-cause notice consultation, which means at least it is directory and discretionary and discretion has to be exercised by the authority in a judicious and reasonable manner and the respondent authority concerned cannot exercise his power of discretion in a discriminatory or arbitrary manner or without giving any reason for not exercising his power of discretion in favour of the noticee. I further find that the aforesaid Circular dated 11th November, 2021, no where says that it is retrospective in nature. It is well settled principle of law that if any person who is enjoying any benefit under any Statute/Circular/Notification it cannot be taken away retrospectively unless the said Statute/Circular/Notification expressly specifies that the same is retrospective in nature.”
“Considering the submission of the parties and relevant provision of law, I am of the view that the petitioner has been able to make out a prima facie case for an interim order and matter requires hearing since questions of law are involved in the matter. Respondents are directed to file affidavit-in-opposition within three weeks. Petitioner to file reply thereto, if any, within two weeks thereafter,” the Court said.
Advocates Mr. Abhratosh Majumder, Ld. Sr. Adv., Mr. Avra Mazumder, Mr. Suresh Kr. Bhutia Mr. Sankar Mukherjee appeared for the petitioners.
Jagdish Das vs Union of India & Ors.
CITATION: 2022 TAXSCAN (HC) 152
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