SCN Issued Without Mandatory Pre-Consultation Under CBEC Guidelines Is Invalid: CESTAT [Read Order]
CESTAT held that a show-cause notice issued without the mandatory pre-consultation required under CBEC guidelines is invalid.
SCN - Taxscan
SCN - Taxscan
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that a show cause notice issued without mandatory pre-consultation under CBEC guidelines is invalid.
SIS Limited, formerly known as Security and Intelligence Services India Ltd., is registered for providing Security Agency, Manpower Supply, and Business Support Services. A show cause notice dated October 18, 2019, was issued for the period 2014-15 to 2016-17, proposing to recover Rs. 6.79 crore, including disallowed CENVAT credit and short-paid service tax.
After adjudication, the Principal Commissioner, CGST and Central Excise, Patna-I, dropped most of the demand and confirmed Rs. 34,63,730 with interest and penalty. The company appealed before the Tribunal.
The appellant’s counsel argued that the notice was issued without following the mandatory pre-show cause consultation required under CBEC Instruction dated December 21, 2015, and Circular No. 1053/02/2017-CX dated March 10, 2017, which applied to all demands exceeding Rs. 50 lakh. He submitted that the relaxation introduced later by Circular No. 1079/03/2021-CX could not apply retrospectively.
The department’s counsel argued that the notice invoked the extended period for suppression, and pre-consultation was not mandatory in such cases. They maintained that the 2021 circular only reiterated the existing position.
The bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that the 2017 circular made pre-consultation mandatory for all demands above Rs. 50 lakh, without any exception for suppression.
It explained that the 2021 circular introduced this exception for the first time and applied prospectively. The tribunal pointed out that since the notice was issued in 2019, the procedure should have been followed. It further observed that most of the demand was dropped and the remaining amount lacked proper investigation, as the data came from disclosed records.
The tribunal held that the show cause notice was invalid for want of mandatory pre-consultation and set aside the confirmed demand of Rs. 34,63,730 with interest and penalty. The appeal was allowed with consequential relief.
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