2020 (3) TMI 661 - HC - Service Tax

Validity of SCN - SCN challenged on the point that the procedure set out for adjudication/assessment has not been followed, insofar as there is no pre-consultative process that has been followed in this case - HELD THAT - Evidently, the pre-adjudication/consultation envisaged is with the Assessing Officer and not with the Audit Commissioner and this error has been rectified by order dated 09.01.2020. To this extent paragraph 11 of the impugned show cause notice is set aside. With the regularisation of the procedure, proceedings under the impugned show cause notice will continue. Petition disposed off.

Summary

Issues:
Challenge to show cause notice based on procedural irregularities.

Analysis:
The petitioner challenged a show cause notice dated 23.10.2019, arguing that the adjudication/assessment procedure was not followed properly due to the absence of a pre-consultative process. After hearing both parties, an order was passed on 16.12.2019 allowing the petitioner to have a pre-decisional consultative hearing with the Assessing Authority. The petitioner appeared before the second respondent on 02.01.2020, and a pre-adjudication consultation was conducted, resulting in a pre-consultative order being passed by the Assessing Officer on 09.01.2020. The Officer identified five points for discussion, including issues related to misrepresentation of construction agreements, incorrect value adoption on works contract services, and maintenance or repair of immovable property. The conclusion was reached that an amicable resolution was not possible, and the proceedings were regularized with the passing of the order on 09.01.2020.

Further, the judgment addressed paragraph 11 of the show cause notice, where the Officer referred to discussions with the Audit Commissioner, concluding that pre-adjudication consultation was unnecessary. The court clarified that the consultation should be with the Assessing Officer, not the Audit Commissioner. Consequently, paragraph 11 of the show cause notice was set aside, and the proceedings under the notice were to continue. The petitioner was granted the liberty to file objections to the show cause notice within two weeks, and the Assessing Officer was directed to complete the proceedings after hearing the petitioner in person. The writ petition was disposed of accordingly, with no costs imposed.

This detailed analysis of the judgment highlights the procedural irregularities challenged by the petitioner, the subsequent pre-adjudication consultation process, the issues discussed during the consultation, the rectification of errors in the show cause notice, and the directions given for further proceedings, ensuring a fair opportunity for the petitioner to present objections and be heard in the assessment process.