M/S Krishangi Construction PVT. LTD. vs. The State Of Bihar
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The petitioner, M/s Krishangi Construction Pvt. Ltd., challenged a demand-cum-show-cause notice dated 24.10.2021 issued under the Finance Act, 1994. The petitioner contended that the mandatory pre-consultation, as per CBDT circulars, was not properly conducted. A pre-consultation show-cause notice dated 17.10.2021 was issued, fixing the consultation for 18.10.2021, which provided only one day's notice. The petitioner alleged that upon visiting the office on 18.10.2021, the designated authority was absent, and an Inspector refused to accept their reply. The respondents did not specifically deny these averments in their counter-affidavit. The respondents argued that pre-consultation was not required as the evaded amount exceeded Rs. 50,00,000/- and involved concealment/evasion.
Held
The Court held that the pre-consultation notice did not provide a proper opportunity to the petitioner. The Court rejected the revenue's argument that pre-consultation was not required, particularly since a pre-consultation notice had already been issued. The reasoning was based on the insufficient notice period (one day) and the petitioner's assertion, which was not denied, that the authority was unavailable and their reply was not accepted. Consequently, the show-cause notice was set aside not on merits, but solely on the ground of the lack of a proper opportunity for consultation. The Court directed the petitioner to file a detailed reply to the pre-consultation notice within three weeks and to appear before the authority on 06.02.2024 for a hearing, which could be conducted either virtually or physically as requested by the petitioner. The Court explicitly stated that no observations were made on the merits of the matter. The ratio decidendi is that statutory or administrative mandates for pre-consultation must be genuinely adhered to, providing a reasonable and effective opportunity to the assessee.
Key Issues
1. Whether the pre-consultation notice issued under the Finance Act, 1994, provided adequate opportunity for consultation to the petitioner, as mandated by CBDT circulars? - Petitioner's argument: The petitioner argued that the one-day notice for pre-consultation was insufficient, and further, when they appeared, the concerned authority was absent, and their reply was refused. They relied on the principle that proper opportunity must be given. - Revenue/State's argument: The learned ASG argued that pre-consultation was not required in this case, especially given the significant amount of alleged evasion (above Rs. 50,00,000/-) and the nature of the allegations (concealment/evasion).
Sections Cited
Finance Act, 1994
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 11-01-2024 The petitioner is before us challenging Annexure-4 demand-cum- show-cause notice issued under the Finance Act, 1994 dated 24.10.2021. Normally, we would have not 2/4 entertained the challenge against the show-cause notice and directed the petitioner to approach the authority and give proper show-cause. However, in the present case, the specific contention of the petitioner is that the pre-consultation as mandated by the CBDT circulars was not carried out in the proper manner. Annexure-1 is referred to which is a pre- consultation show-cause notice dated 17.10.2021. Specifically, Paragraph 3 is pointed out, which is extracted herein below: In view of the above, the Joint Commissioner, Central GST & Central Excise Commissionerate, Patna-1 having his office at C.R. Building(Annexe), B.C. Patel Path, Patna-800001 has been pleased to give you the opportunity for pre- notice consultation on 18.10.2021 at 11:15:00 AM in his chamber. If you wish to be consulted on Virtual Mode the same may be informed to the undersigned for sharing link of WEBEX platform.
The petitioner also has a contention which has been specifically stated on affidavit that in response to the aforesaid letter on 17.10.2021, the petitioner approached the office of the 6th respondent, but he was not present there. An Inspector was present who refused to accept the reply to be given. There is no specific denial of the aforesaid averments made on affidavit, in the counter affidavit.
3/4
Further, it is to be noticed that the pre-consultation notice issued on 17.10.2021 gave only one day’s notice i.e., on 18.10.2021. It is also pertinent that the pre-consultation notice also speaks of the petitioner being permitted to seek for consultation on virtual mode for which also there would obviously be no time, when the date fixed was on the very next day.
The learned ASG, who appears on behalf of the respondents submits that this is a fit case where pre-consultation was not required, especially since the total evaded amount is above Rs. 50,00,000/- and the allegation is with respect to concealment/ evasion.
We are not ready to countenance the argument so raised by the learned ASG, especially when a pre-consultation show-cause notice was issued by the authorities.
We hence, set aside the show-cause notice, not on merits, but only on no proper opportunity having been given to the petitioner for reply and consultation. In such circumstances, the show-cause notice at Annexure-4 will stand set aside. The petitioner is directed to file a detailed reply to the pre- consultation notice within a period of three weeks from today. The petitioner will also appear before the authority on 4/4 06.02.2024 on which date or any other date fixed, the petitioner shall also be heard either on virtual mode or on the physical mode as requested by the petitioner. We make it clear that we have not made any observation on the merits of the matter.
The writ petition stands allowed.
Anushka/- (K. Vinod Chandran, CJ) ( Rajiv Roy, J) AFR/NAFR CAV DATE Uploading Date 13.01.2024 Transmission Date
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.