Ratan Kumar Singh vs. Commissioner Of CGST And Central Excise

Facts

The petitioner, Ratan Kumar Singh, a works contractor engaged in construction of roads and bridges for the State, is challenging an order dated February 15, 2023, which followed a reminder to an earlier show cause notice. The petitioner contends that no pre-consultation was conducted before the order was passed. The petitioner relies on a Master Circular on Show Cause Notice, Adjudication and Recovery dated March 10, 2017, which prescribes consultation with the assessee. The petitioner also claims exemption for services related to construction of roads for public use. A similar matter before the Delhi High Court, which also involved a direction for pre-consultation, was appealed to the Supreme Court. The Supreme Court, while admitting the appeal, allowed the department liberty to revive the earlier show cause notice if a fresh one was issued after pre-consultation, to avoid limitation issues.

Held

The Court decided to adopt the approach taken by the Delhi High Court and the Supreme Court in a related matter. The Court held that the parties should be relegated to the stage prior to the issuance of the impugned show cause notice to carry out the mandatory consultation as prescribed by the Central Board of Excise and Customs. The Court explicitly stated that it was not making any observations on the merits of the matter, including the issue of exemption claimed by the petitioner. The Court reasoned that this approach aligns with the directions given in similar cases, ensuring procedural fairness. The ratio decidendi is that procedural irregularities, such as the absence of mandatory consultation, can lead to the matter being remitted to an earlier stage, irrespective of the merits of the case or potential limitation issues. The operative direction is to allow the writ petition on the terms of relegating the parties to the consultation stage. If a show cause notice is required after consultation, the issue of limitation will not impede its issuance.

Key Issues

1. Whether the impugned order dated February 15, 2023, is vitiated due to the absence of pre-consultation with the petitioner, as mandated by paragraph 5.0 of the Master Circular on Show Cause Notice, Adjudication and Recovery dated March 10, 2017? (Question of law and procedure) 2. Whether the services provided by the petitioner, namely the construction of roads and bridges for public use, are exempt from GST as per the relevant notification? (Question of law and fact) Petitioner's arguments: The petitioner argues that the order is invalid because the mandatory pre-consultation with the assessee, as prescribed by the Central Board of Excise and Customs' Master Circular, was not conducted. They rely on Annexure P-7 (Master Circular) and Annexure P-9 (Delhi High Court judgment in Amadeus India Pvt. Ltd. Vs. Principal Commissioner, Central Excise, Service Tax and Central Tax Commissionerate). The petitioner also asserts that their services are exempt under a specific notification (Annexure-3). Revenue's arguments: The judgment does not record any specific arguments made by the respondent revenue department regarding the absence of pre-consultation or the exemption claimed by the petitioner. However, the Supreme Court's order in a related matter suggests the department's willingness to conduct fresh proceedings after consultation.