The Gauhati High Court has held that a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) which only clarifies the CBIC’s original instructions is clarificatory in nature and acts retrospectively.
M/s Sanjib Das, the petitioner is a businessman executing contracts primarily work contracts with Public Sector Undertaking or the Government of India Enterprises. The petitioner had rendered taxable services amounting to Rs.7,95,64,992/and on such value of services, the service tax amounting to Rs.1,15,97,072/- was required to be paid by the petitioner which the petitioner failed to pay.
The petitioner was asked to show cause as to why the service tax amounting to Rs.1,15,97,072/- on the services rendered during the period from F.Y. 2014-15 (October 2014 to March 2015) to F.Y. 2017-18 (up to June 2017) should not be demanded/recovered from the petitioner under the proviso of Section 73 (1) of the Finance Act, 1994.
The petitioner contended that referring to Clause 5 of the Master Circular stipulates that the issuance of the show cause notice dated 31.12.2020 without the pre-show cause consultation violated the Master Circular, and the issuance of the said show cause notice is without jurisdiction.
The Single Bench of Justice Devashis Baruah viewed that 11.11.2021 was clarificatory in nature thereby clarifying the Master Circular dated 10.03.2017. The said Circular dated 11.11.2021 stipulates that the concept of pre-showcase notice consultation in Central Excise and Service Tax was introduced vide the Board’s instructions dated 21.12.2015 as a trade facilitation measure.
In Clause 5 of the said Circular, it was reiterated that the pre-show cause notice consultation shall not be mandatory for those cases booked under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 for recovery of duties or taxes not levied or paid or short levied or short paid or erroneously refunded for the reason mentioned in sub-clauses (a) to (e) of Clause 5.
It was observed that the said Circular does not bring anything new and the stand taken by the respondent authorities in the impugned show cause notice dated 31.12.2020 that the petitioner had suppressed material facts, the same would come within the exception as mentioned in Clause 5 (d) of the Circular dated 11.11.2021 and as such it was not mandatory for respondent authorities to have a pre-show cause notice consultation was viewed as correct.
The Bench further held that the issuance of the Demand-cum-Show Cause Notice dated 31.12.2021 was exercised by the authority according to the statutory power conferred upon the respondent authorities under Section 73 of the Finance Act of 1994 and the issuance of the said show cause notice was with jurisdiction.
Advocate Mr A K Gupta appeared on behalf of the petitioner and Advocate Asstt S G I appeared for the respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates.
