2022 (2) TMI 1369 - HC - Service Tax

Validity of SCN - SCN issued without granting or considering the prayer for adjournment to the hearing fixed by the respondent concerned on its notice of pre-show- cause notice consultation as per Circular No. 1076/02/2020 CX dated November 19, 2020 issued by the Central Board of Indirect Taxes and Customs - high pitch assessment involving demand above Rs. 50 lakhs - HELD THAT - This writ petition, being W. P. A. No. 17451 of 2021 is disposed of by setting aside the impugned show- cause-cum-demand notice dated October 11, 2021 and the respondents concerned are directed to issue a fresh notice of hearing for pre-show- cause-notice consultation within ten days from date and to take a decision on the same in accordance with law and in case of failure of the petitioner to attend the hearing on the date so fixed by the respondents concerned, the respondents concerned shall be entitled to pass ex parte order and to take any further action in accordance with law. It is clarified that this court has not gone into the merits of the impugned show-cause-cum-demand notice dated November 11, 2021 and the impugned show-cause-cum-demand notice is set aside only on the ground of violation of principle of natural justice and violation of the paragraph 4 of the aforesaid circular of the Board dated November 19, 2020 in dealing with pre-show-cause-consultation notice dated October 5, 2021.

Summary

Issues:
Challenging show-cause-cum-demand notice issued without considering adjournment request; Violation of principle of natural justice by denying opportunity of hearing on pre-show-cause-notice consultation; Interpretation of circulars regarding mandatory pre-show-cause-notice consultation.

Analysis:
The petitioner challenged a show-cause-cum-demand notice issued without considering the prayer for adjournment, citing a circular mandating pre-show-cause-notice consultation for demands above Rs. 50 lakhs. The petitioner requested time to attend the hearing, citing inability due to puja vacation. The court noted the failure of the authority to consider the circular and the denial of opportunity for a hearing. The respondent failed to provide clarity on whether the prayer for time was addressed or any decision was made before issuing the impugned notice.

The respondent argued that a subsequent circular made pre-show-cause-notice consultation non-mandatory, but failed to prove its retrospective nature. The court emphasized that benefits granted under previous circulars cannot be taken away retrospectively without explicit mention. The issue of pre-show-cause-notice consultation could be considered in response to the impugned notice, according to the respondent.

The court disposed of the writ petition by setting aside the impugned notice, directing the respondents to issue a fresh notice for pre-show-cause-notice consultation within ten days. Failure to attend the hearing would allow the respondents to pass an ex parte order. The court clarified that the decision was based on the violation of natural justice and the circular regarding pre-show-cause-notice consultation, without delving into the merits of the impugned notice.