Excellency Services, Thr. Its Prop., Brian Cosme Fernandes vs. Union Of INDIA, Thr. Its Secretary, Ministry Of Finance, Dept. Of Revenue, New Delhi And 4 Ors

Held

The Court held that there was no genuine pre-consultation in the case, despite the opportunity granted by the Court. The initial notice dated 11.12.2020, served on 14.12.2020, with the consultation fixed for 15.12.2020, and the show cause notice also issued on the same day, was considered mere lip service and not a proper compliance with paragraph 5 of the Master Circular. The subsequent consultation on 28.04.2021, where the petitioner's submissions were merely taken on record without further discussion or deliberation, was also found to be lacking in genuine consultation, aligning with the principle laid down in Omaxe Ltd. & Another Vs. Union of India & Others. However, the Court decided not to quash the impugned show cause notice. Instead, it directed the respondents to hold the consultation process again, guided by the observations in Omaxe Ltd., within two months from the date of the order. Until the conclusion of this renewed pre-consultation process, the show cause notice dated 15.12.2020 would not be proceeded with. The Court explicitly stated that it had not examined the merits of the dispute, leaving all contentions open. The ratio is that a procedural requirement like pre-consultation must be conducted genuinely, involving a two-way dialogue, and failure to do so necessitates a fresh attempt at compliance rather than outright quashing of the subsequent notice, especially when the Court has already intervened.

Facts

The petitioner, M/s Excellency Services, challenged a letter dated 11.12.2020 and a show cause notice dated 15.12.2020 issued by the Superintendent and Additional Commissioner of Central GST, respectively. The challenge was based on the alleged non-compliance with paragraph 5 of the Master Circular dated 10.03.2017, which mandates pre-show cause notice consultation for demands exceeding Rs. 50 lakhs. The petitioner argued that the pre-consultation notice dated 11.12.2020 was served on 14.12.2020, with the consultation scheduled for 15.12.2020, and the show cause notice also issued on 15.12.2020, constituting mere lip service. The High Court had previously granted interim relief and directed a pre-consultation on 28.04.2021. The minutes of this consultation were later accepted by both parties, but the petitioner contended that no genuine consultation occurred.

Key Issues

1. Whether the pre-consultation notice dated 11.12.2020, served on 14.12.2020, with the consultation scheduled for 15.12.2020, and the show cause notice also issued on 15.12.2020, constituted genuine compliance with paragraph 5 of the Master Circular dated 10.03.2017 regarding pre-show cause notice consultation? (Question of law and fact, turning on paragraph 5 of the Master Circular). Petitioner's arguments: The petitioner argued that the timeline for the pre-consultation notice and the issuance of the show cause notice demonstrated a lack of genuine intention to consult. They contended that the subsequent consultation on 28.04.2021, despite being directed by the Court, also failed to be a genuine consultation, as it merely recorded their submissions without any discussion or deliberation. They relied on the Delhi High Court's decision in Omaxe Ltd. & Another Vs. Union of India & Others, which held that voluntary statements do not constitute pre-show cause notice consultation. The petitioner sought setting aside of the show cause notice, with liberty to the respondents to issue a fresh one, keeping open the issue of limitation as per the Supreme Court case of Principal Commissioner, Central Excise, Service Tax, and Central Tax Commissionerate Vs. Amadeus India Pvt. Ltd. Respondents' arguments: The respondents, through Ms. Asha Desai, argued that the communication dated 28.05.2021, requiring the petitioner to file a show cause/demand notice within seven days, indicated that the pre-consultation had concluded without result. They did not explicitly address the argument regarding the genuineness of the consultation process beyond this point.