The Delhi High Court ruled that the “voluntary statements” recorded before the Senior Intelligence Officer cannot constitute pre-show cause notice consultation.
The petitioner, M/S Omaxe New Chandigarh Developers Pvt. Ltd. raised the issue regarding the applicability of the instruction dated December 21, 2015 bearing and the Master Circular dated March 10, 2017, issued by Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Government of India which is present, known as Central Board of Indirect Taxes & Customs. In this context, in particular, the petitioners rely upon paragraph 5 of the 2017 Master Circular.
As per paragraph 5 of the 2017 Master Circular, the contesting respondent authorities were mandatorily required to hold pre-show cause notice consultation with the petitioners prior to initiation of the proceedings under the Finance Act, 1994.
The defence taken by the contesting respondents is that pre-show cause notice consultation had occurred and, in that context, reliance is placed upon the statements made by the petitioners’ officials, before the Senior Intelligence Officer under Section 14 of the Central Excise Act, 1944, as made applicable to Service Tax matters vide Section 83 of the Finance Act, 1994.
The division bench of Justices Rajiv Shakhdher and Talwant Singh said that “voluntary statements” recorded before the Senior Intelligence Officer cannot constitute pre-show cause notice consultation as envisaged in paragraph 5 of the 2017 Master Circular. Consultation entails discussion and deliberation. There is back and forth between parties concerned with the consultative process, leading to, metaphorically speaking, often, separation of wheat from the chaff.
The court issued various directions while disposing of the writ petition.
Firstly, the contesting respondents will serve an appropriate communication on the petitioner indicating therein the date, time and venue at which they intend to convene a meeting for holding pre-show cause notice consultation.
Secondly, the concerned officer will accord a personal hearing to the authorized representative of the petitioner.
Thirdly, the concerned officer would allow the petitioner to make submissions with regard to the merits of the matter including the aspect pertaining to the jurisdiction. The concerned officer will, after hearing the authorized representative of the petitioner, pass an order as to whether or not it is a fit case for continuing with the proceedings in accordance with the mandate of the law including the Finance Act, 1994.
Fourthly, if the concerned officer concludes that it is a fit case in which proceedings should continue against the petitioner, then, he would take a decision with regard to whether or not the impugned show cause notice should be revived or a fresh show-cause notice should be issued in consonance with the decision that would be rendered by the Supreme Court in SLP in case of Amadeus India Pvt. Ltd. vs. Principal Commissioner, Central Excise, Service Tax, and Central Tax Commissionerate.
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