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2021 (3) TMI 85 - HC - Service TaxPrinciples of natural justice - allegation is that SCN issued with a pre- determined and closed mind without appreciating the statutory provisions - time limitation - primary thrust of the challenge is on non-compliance of the consultative exercise prior to the issuance of show-cause notice as per para-5.0 of the master circular dated 10th March 2017 - HELD THAT - Para 5.0 of the master circular dated 10th March 2017 appears to have been incorporated to facilitate trade and promote voluntary compliance and to reduce the necessity of issuing show-cause notice in such cases where the demand of duty is above Rs. 50 lakhs. In a way the rigors of adjudication proceedings was intended to be avoided if the case of the assessee does not fall within the exceptions i.e. preventive / offence related SCNs which has a more serious import. The SCN also indicates that had the third party information not been received by the department and investigation initiated the case could not have come to light. As such it appeared that it is a case of wilful suppression of material facts from the department. Para-21 of the SCN indicates that the Managing Director of the assessee and noticee no.2 was also asked to explain as to why he be not held liable for penalty under Section 78A of the Finance Act 1994 for his complicity in the aforesaid evasion of service tax since he had not given satisfactory answers to the queries made - Proceedings for adjudication in such matters are initiated by the office of the Commissioner of GST and Central Service tax as has been informed by the learned counsel for the respondents though notices are issued to the assessees by the preventive branch upon third party information and investigation asking them to explain the discrepancy in the taxable value received by them for the relevant period upon comparison of other materials available with the department. In this case the investigation was initiated upon inputs received from the Income Tax Department regarding discrepancy in the taxable value received by the petitioner as per TDS and income Tax Return and that shown in ST-3 Return filed by them for the period 2012-13. Upon consideration of the facts and circumstances discussed it prima-facie appears that the SCN fell into the category of preventive show-cause notice falling under the exception under para-5.0 of the master circular dated 10th March 2017. Had the proceedings not been initiated the liability of paying service tax might have been evaded - thus the case of the petitioner comes within the exception to para-5.0 of the master circular dated 10th March 2017. The adjudication order has already been passed on 16th February 2021. Petition dismissed.
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