HC Quashes SCN for Non-Compliance with Mandatory Pre-Consultation

Case Details: Rochem Separation Systems (India) Pvt. Ltd. vs. Union of India (2025) 35 Centax 113 (Bom)

Judiciary and Counsel Details

• M.S. Sonak & Advait M. Sethna, JJ.
• S/Shri Prakash Shah, Senior Advocate, Prithiviraj Choudhary a/w. Ankit Trivedi, Ms Kausar Jahan Sayed i/b. Vashi Associates, Bharat Raichandani a/w. Mahesh Raichandani, Ms Dhanishta Kawale i/b. UBR Legal, a/w. Mihir Mehta, Mohit Raval i/b. PDS Legal, for the Petitioner.
• S/Shri Maya Majumdar a/w. Saket Ketkar, J.B. Mishra a/w. Ms Maya Majumdar, Rupesh Dubey, Satyaprakash Sharma a/w. Ms Sangeeta Yadav, Harpreet Kaur a/w. Dhananjay B. Deshmukh, Abhishek Mishra a/w. Ms Mamta Omle, Yashodeep Deshmukh, for the Respondent.

Facts of the Case

The assessee challenged the show cause notice issued under Section 73 of the Finance Act, 1994, on the ground that the jurisdictional authority had failed to comply with the pre-consultation process mandated by CBIC. It was submitted that as per Circular No. 1053/02/2017-CX, dated 10-03-2017 [Master Circular] and Circular No. 1076/02/2020-CX, dated 19-11-2020, issuance of a pre-consultation notice to the assessee prior to issuance of a show cause notice is mandatory in all cases where the proposed duty demand exceeds ₹50 lakhs, except in preventive or offence-related matters. The assessee contended that the omission to conduct such pre-consultation vitiated the entire proceedings and rendered the show cause notice unsustainable in law. The matter was accordingly placed before the High Court.

 High Court Held

The High Court held that the pre-consultation process is mandatory and non-compliance with it renders the show cause notice unsustainable. The Court observed that the CBIC circulars mandating pre-consultation are binding on departmental officers. Apart from its binding character, the Court noted that the requirement has been introduced as an important step towards trade facilitation and to promote necessary compliance, thereby reducing the need for issuing show-cause notices in every case. The Court further held that time spent on the pre-consultation process should not be counted for the purpose of determining limitation for issuing a show-cause notice or completing its adjudication. Consequently, the High Court quashed the impugned show cause notice.

List of Cases Cited

• Amadeus India Pvt. Ltd. v. Principal Commissioner — 2019 (25) G.S.T.L. 486 (Del.) — Relied on [Paras 10, 12, 20, 21, 22, 24, 25, 28]
• Back Office It Solutions Private Limited v. Union of India — 2021 (50) G.S.T.L. 522 (Del.) — Relied on [Para 12]
• Brilliant Corporate Services Pvt. Ltd. v. Commissioner of GST Central Ex. — (2022) 104 GSTR 296 — Dissented [Paras 21, 31, 33, 36]
• Commissioner of Income Tax v. Camco Colour Co. — (2002) 173 CTR 255 — Relied on [Para 9]
• Commissioner v. Indian Oil Corporation Ltd. — 2004 (165) E.L.T. 257 (S.C.) — Relied on [Paras 9, 34]
• Commissioner v. Ratan Melting and Wire Industries — 2008 (231) E.L.T. 22 (S.C.) — Distinguished [Paras 31, 35]
• Dharamshil Agencies v. Union of India — 2021 (55) G.S.T.L. 516 (Guj.) — Relied on [Paras 13, 47]
• Hitachi Power Europe Gmbh v. Central Board of Indirect Taxes and Customs — 2019 (27) G.S.T.L. 12 (Mad.) — Relied on [Paras 18, 32, 33, 37]
• Jay Mahakali Industrial Service v. Union of India — 2025 (393) E.L.T. 28 (Guj.) = (2025) 29 Centax 353 (Guj.) — Relied on [Paras 16, 25]
• K.P. Varghese v. Income Tax Officer — (1981) 4 SCC 173 — Relied on [Paras 9, 34]
• Principal Commissioner v. Amadeus India Pvt. Ltd. — 2020 (32) G.S.T.L. J121 (S.C.) — Referred on [Paras 20, 21, 22, 23, 24]
• Ramnath Prasad v. Principal Commissioner — (2025) 29 Centax 306 (Pat.) — Relied on [Paras 21, 27]
• Ruchi Soya Inds.Ltd. v. Union of India — 2021 (377) E.L.T. 432 (Mad.) — Referred [Paras 21, 26]
• Singh Caterers and Vendors v. Directorate of General of GST Intelligence (Govt. of India) — (2025) 28 Centax 235 (Pat.) — Distinguished [Paras 21, 28]
• State of Tamil Nadu v. India Cements Ltd. — 2011 (13) SCC 247 — Relied on [Para 11]
• Tata Teleservices Ltd. v. Commissioner — 2025 (392) E.L.T. 338 (Del.) = (2025) 28 Centax 191 (Del.) — Distinguished [Paras 21, 30]
• Tube Investment of India Ltd. v. Union of India — 2018 (16) G.S.T.L. 376 (Mad.) — Relied on [Paras 11, 17, 32, 33, 37]
• Union of India v. Arviva Industries (India) Ltd. — 2007 (209) E.L.T. 5 (S.C.) — Relied on [Paras 9, 34]
• Varalaxmi Construction Co. v. Union of India — by Delhi High Court — Relied on [Paras 19, 41]
• Yaduka Agrotech Pvt. Ltd. v. Commissioner — 2022 (66) G.S.T.L. 385 (S.C.) — Distinguished [Paras 38, 39, 40]

List of Departmental Clarification Cited

• Master Circular No. 1053/2/2017-C.X., dated 10-3-2017 [Paras 4, 6, 7, 10, 11, 13, 15, 17, 18, 19, 31, 32, 36, 42]
• C.B.E. & C. Circular No. 1076/2/2020-C.X., dated 19-11-2020 [Paras 4, 8, 19, 36, 41, 42]