Jay Mahakali Industrial Service Vs Union of India & Ors. (Gujarat High Court)
The Gujarat High Court considered petitions challenging show cause notices issued without pre-show cause consultation required under the Board’s Instruction dated 21.12.2015 and Circular No. 1053/02/2017-CX dated 10.03.2017 for demands exceeding Rs.50 lakh. The Court noted that Circular No. 1079/03/2021-CX dated 11.11.2021 subsequently specified cases involving fraud, collusion, wilful misstatement, suppression of facts or specified contraventions where such consultation was not mandatory, but held that the word “reiterated” did not give the Circular retrospective effect. Relying on L AND T Hydrocarbon Engineering Ltd. Vs. Union of India, the Court held that absence of mandatory pre-show cause consultation was fatal. Except Special Civil Application No. 5685 of 2022, the show cause notices were quashed and set aside; in that matter, the notice was also found vague and a fresh show cause notice was required. The Court further directed that the Order-in-Original, if any, would also be quashed and set aside, with liberty to the Department to initiate proceedings or revive the original show cause notice subject to the outcome of pending Supreme Court proceedings and in accordance with law.
Issue Before the Gujarat High Court
The petitions were filed challenging show cause notices issued by the respondents-authorities without granting pre-consultation to the petitioners. The grievance concerned non-compliance with the requirement of pre-show cause notice consultation under the Master Circular dated 10.03.2017 where the demand of duty exceeded Rs.50,00,000/-.
