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2024 Supreme(Guj) 1584
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Niral R. Mehta, JJ.
Dinesh Ramavatar Sharma – Petitioner
Versus
Union Of India & Anr. – Respondents
R/Special Civil Application No. 15147 of 2021
Decided On : 26-06-2024
Advocate Appeared:
For the Petitioner: Amal Paresh Dave, Mr Paresh M Dave
For the Respondent: Mr Ankit Shah, Mr Nikunt K Raval
IMPORTANT POINT
The court established that pre-show cause notice consultation is mandatory for demands exceeding Rs.50 lakhs, and failure to comply renders the notice invalid.
Headnote:
Prohibition - Writs - Article 226 - The court emphasized the mandatory requirement of pre-show cause notice consultation as per the Master Circular dated 10th March 2017, which was not adhered to, leading to the quashing of the show cause notice.
Fact of the Case:
The petitioner, engaged in construction, received a show cause notice for service tax recovery exceeding Rs.50,00,000 without prior consultation, which is mandated for such cases.
Finding of the Court:
The court found that the issuance of the show cause notice violated the mandatory pre-notice consultation requirement, thus it was quashed.
Issues: Whether the respondent authorities complied with the mandatory pre-show cause notice consultation requirement before issuing the show cause notice.
Ratio Decidendi: The court held that the failure to conduct the mandatory pre-notice consultation as per the Master Circular invalidated the show cause notice.
Result: The impugned show cause notice was quashed and set aside, allowing for proper pre-notice consultation.
ORDER :
BHARGAV D. KARIA, J.
1. Learned advocate Mr. Paresh Dave has tendered the draft amendment. The same is allowed in terms of the draft. To be carried out forthwith.
2. Heard learned advocate Mr. Paresh Dave for the petitioner and learned advocate Mr. Nikunt K. Raval for the respondent.
3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:-
“17(A) That Your Lordships may be pleased to issue a Writ of Prohibition or any other appropriate writ, direction or order completely and permanently prohibiting the Respondents herein from taking any action against the Petitioner pursuant to proceeding of Show Cause Notice File No.STC/15-36/O&A/2020 dated 28.09.2020.
(B) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction quashing and setting aside Show Cause Notice File No. STC/15-36/O&A/2020 dated 28.09.2020.
(C) Pending hearing and final disposal of the present petition, Your Lordship may be pleased to stay further proceedings of Show Cause Notice File No. STC/15-36/ O&A/2020 dated 28.09.2020.
(D) An ex-parte ad-interim relief in terms of para 17(C) above may be kindly be granted.
(E) Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted.”
4. Brief facts of the case are as under:-
4.1 The petitioner is working in construction project such as clearing ground for foundations and fabricating steel sheds using pipes, poles & iron sheets as well as gates & railing. During the course of their business, the petitioner has been fabricating and erecting iron & steel objects such as gates, sheds, railing ramps and so on.
4.2 The petitioner has been keeping the ledger and books of account as well as paying income tax on the money he has earned from his business operations.
4.3 It is the case of the petitioner that he was not registered with the Central Excise and Service Tax department prior to period of 01st July, 2017 because he was under the impression that only income tax would be assessed on his business activities.
4.4 Thereafter on 17.08.2020, Superintendent Central Goods & Service Tax – respondent authority issued summons to the petitioner.
4.5 It is the case of the petitioner that on 28.09.2020, Additional Commissioner, Central Excise & GST issued show cause notice for recovery of Rs.59,87,560/- as service tax for financial year 2014-15 to financial year 2016-17.
4.6 It is the case of the petitioner that before issuance of the show cause notice for the demand exceeding Rs.50,00,000/-, the respondent – Department is in breach of mandatory condition of pre-notice consultation laid down by the Government vide para No.5 of the Master Circular dated 10th March, 2017.
5. Learned advocate Mr. Paresh Dave for the petitioner referred to and relied upon decision in case of Dharamshil Agencies v. Union of India in Special Civil Application No.8255 of 2019 and submitted that the show cause notice may be quashed and set aside and matter may be remanded back to the respondent authorities for mandatory requirement of the pre-notice consultation. Considering such submissions, this Court passed the following order on 14.03.2024:-
“[1] Heard learned advocate Mr. Paresh Dave for the petitioner, learned advocate Mr. Ankit Shah for the respondent No.1 and learned advocate Mr. Nikunt Raval for the respondent No.2.
[2] The principal grievance raised in this petition is not abiding 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/-.
[3] The impugned show-cause notice in this petition is issued without following the mandatory requirements of the Master Circular.
[4] Learned advocates for both the sides referred to and relied upon the decision of this Court in the case of Dharamshil Agencies Versus Union of India reported in 2021(7) TMI 1064.
[5] It was also pointed out by learned
