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The Division Bench comprising Justice Rajiv Shakdher & Justice Talwant Singh of Delhi High Court ruled that that “voluntary statements” recorded before the Senior Intelligence Officer cannot constitute pre-show cause notice consultation as envisaged in the 2017 Master Circular.

The Court said that voluntary statements are, at best, a one-way dialogue made before an authority which often does not, as in this case, take a decision as whether or not next steps in the matter are required to be taken. 

The limited issue which arises for consideration concerns the applicability of the instruction dated Dec 21, 2015 bearing F. No. 1080/09/DLA/MISC/15/757 and the Master Circular dated March 10, 2017 issued by CBIC. 

It is not in dispute that the show cause notices challenged in the captioned writ petitions were issued by an officer of the rank of Additional Director General. Therefore, it cannot be said that voluntary statements made by the officials of the petitioners before the Senior Intelligence Officer would constitute a pre-show cause notice consultation, as stipulated under 2017 Master Circular. 

The Court therefore issued directions similar to the ones which were issued in W.P.(C) 5766/2019, that:

1. The contesting respondents will serve an appropriate communication on the petitioner indicating therein the date, time and venue at which they intend to convene a meeting for holding pre-show cause notice consultation;

2. The concerned officer will accord a personal hearing to the authorized representative of the petitioner;

3. The concerned officer would allow the petitioner to make submissions with regard to the merits of the matter including the aspect pertaining to the jurisdiction. The concerned officer will, after hearing the authorized representative of the petitioner, pass an order as to whether or not it is a fit case for continuing with the proceedings in accordance with the mandate of the law including the Finance Act, 1994;

4. If the concerned officer concludes that it is a fit case in which proceedings should continue against the petitioner, then, he would take a decision with regard to whether or not the show cause notice should be revived or a fresh show cause notice should be issued. 

Case Title: Omaxe Ltd & Anr vs UOI & Ors