2024 (3) TMI 1332 - HC - Service Tax

Validity of impugned SCN - Failure to abide by the requirement of the pre-show cause notice consultation as provided in Master Circular dated 10th March 2017, as demand of duty involves more than Rs. 50,00,000/- - impugned SCN in this petition is issued without following the mandatory requirements of the Master Circular - HELD THAT - It was also pointed out by learned advocates for both the sides that the matter is also subjudice before the Hon ble Supreme Court with regard to the issue of limitation if the impugned show cause notice is quashed and set aside by this Court. The respondent authorities are directed to undergo the process of pre-consultation keeping the impugned show cause notice in abeyance on record before the next date of hearing. Such exercise shall be completed within four weeks. Stand over to 18th April 2024.

Summary

Issues involved:
Violation of pre-show cause notice consultation requirement as per Master Circular; Issuance of show-cause notice without following mandatory requirements of Master Circular; Reference to the decision in Dharamshil Agencies Versus Union of India case; Subjudice matter before the Supreme Court regarding the issue of limitation; Direction to respondent authorities for pre-consultation process before the next hearing date.

Analysis:
The petition raised concerns about not adhering to the pre-show cause notice consultation requirement outlined in the Master Circular dated 10th March 2017 when the duty demand exceeded Rs. 50,00,000. The show-cause notice under scrutiny was issued without complying with the mandatory provisions of the Master Circular, leading to a legal challenge. Both parties' advocates cited the decision in the Dharamshil Agencies Versus Union of India case, emphasizing its relevance to the current matter. Additionally, it was highlighted that the issue of limitation concerning the show-cause notice's quashing is pending before the Supreme Court. In response to these arguments, the court directed the respondent authorities to conduct the pre-consultation process as required, suspending the show-cause notice until completion within four weeks. The case was adjourned for further proceedings on 18th April 2024.