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2019 (5) TMI 669

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..... ircular. A pointed question was posed by the Court to Mr.Harpreet Singh whether prior to issuing the impugned SCN, a decision was taken by the Respondent in the light of para 5.0 of the Master Circular not to undertake the pre-notice consultation. After going through the notes in file, Mr. Harpreet Singh stated that there was no noting in the file to that effect - In other words, it appears that the Respondent completely ignored the Master Circular before proceeding to issue the impugned SCN. The mandatory character of the Master Circular can be traced to Section 83 of the Finance Act, 1994 which makes Section 37 B of the Central Excise Act, 1944 applicable in relation to service tax. In terms Section 37 B of the Central Excise Act, 1944 in .....

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..... 10th March, 2017 issued by the Central Board of Excise and Customs ( CBEC )? 2. The facts in brief are that the Petitioner provides, inter alia, computer data processing software, which is used by travel agents and ticket booking entities in the Airline industry. The question whether the services provided by the Petitioner is amenable to service tax engaged the attention of the Customs Excise Services Tax Appellate Tribunal ( CESTAT ) Principal Bench in Acquired Services Pvt. Ltd. v. Commissioner of Service Tax (2014) 36 STR 1148 (TRI-10). The CESTAT held that the services provided by AIPL to overseas entities did not constitute either business auxilliary services or export of services. The said decision is stated to be pending in appeal b .....

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..... the Finance Act, 1994 read with Section 174 of the Central Goods & Services Tax Act, 2017 (CGST Act) should not be levied, in addition to the recovery of interest under Section 75 of the Finance Act, 1994. 6. On 3rd October 2018, the Petitioner drew the attention of the Respondent to the Master Circular dated 10th March, 2017 read with an instruction dated 21st December, 2015 issued by the CBEC in terms of which a pre-show cause notice consultation was mandatory in cases involving demand of duty above ₹ 50 Lakhs. A reminder was again sent by the Petitioner on 13th November, 2018. When no response was received, the present writ petition was filed on13th December, 2018. 7. While directing notice to be issued on 12th February, 2019 .....

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..... s during the consultation process. The TARC recommended that only those officers competent to issue notices should engage in such consulation; they should adopt an open and receptive attitude and give full consideration to tax payer s points of view first before formulating their own opinion. This exercise was to narrowed down the issues and confine the notice only in respect of unreserved issues . Further the points on which agreement has been reached should not be contested any further by either party. 11. The above recommendations were accepted and the CBEC issued the Master Circular on 10th March, 2017. The relevant paragraph of the said Master Circular, which has been relied upon by both parties reads as under: 5.0 Consultation with th .....

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..... tax and other incidental levies, the SCN partakes of the character of an offence related SCN and therefore falls within the exceptions carved out under para 5.0 of the Master Circular. 14. The above submission runs contrary to the very object of para 5.0 which is to narrow down the scope of the dispute by engaging the Assessee on specific areas where the Respondent may require information/clarification from the Assessee regarding alleged evasion of service tax. In the context of the present case, in relation to documents recovered during the search and statements recorded of representatives to the Petitioner in that process, several questions may have arisen for consideration by the Respondent which may require a clarification from the Pet .....

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..... issue the impugned SCN. 16. The mandatory character of the Master Circular can be traced to Section 83 of the Finance Act, 1994 which makes Section 37 B of the Central Excise Act, 1944 applicable in relation to service tax. In terms Section 37 B of the Central Excise Act, 1944 instructions issued by the CBEC would be binding on the officers of the Department. 17. The legal position in this regard is well-settled. Illustratively a reference may be made to the decision in State of Tamil Nadu v. India Cements Ltd. (2011) 13 SCC 247 (SC). Specific to the Master Circular, a reference may be made to the judgment dated 9th February, 2018 passed by the High Court of Judicature at Madras in W.P.(C). 11858/2017 (Tube Investment of India Ltd. v. Union .....

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