Tamilnadu Transmission Corporation Ltd Vs Commissioner of GST (Madras High Court)
The Madras High Court decided a batch of 30 matters comprising 21 writ appeals and 9 writ petitions, most of which challenged show cause notices, with a few challenging orders-in-original. The central issue common to all cases was whether the pre-consultative process under the Central Excise Act is mandatory prior to issuance of show cause notices on merits or passing of orders-in-original.
The Court examined the legal position by referring to a detailed decision of the Bombay High Court in Rochem Separation Systems (India) Pvt. Ltd., which addressed an identical issue. The Bombay High Court had held that the requirement of pre-consultation cannot be treated as an empty formality and must be regarded as mandatory, particularly in light of CBIC Master Circulars dated 10 March 2017 and 19 November 2020. These circulars require pre-consultation in cases where the tax demand exceeds ₹50 lakhs, except where specified exceptions apply. The Madras High Court noted that these circulars are binding on the Department and were introduced as a trade facilitation measure to reduce avoidable litigation and encourage voluntary compliance through an amicable dispute resolution mechanism.
The Madras High Court also reviewed a wide range of judicial precedents from various High Courts and the Supreme Court, all of which consistently recognise the binding nature of departmental circulars and the importance of procedural fairness. The Court observed that there was an overwhelming judicial consensus that pre-consultation is mandatory, and that the contrary view taken in one isolated decision could not outweigh the consistent line of authority.
