On 1st
January 2013 Indian Tax lawyers woke up to the horror of a new circular issued
by central board of excise and customs. F.No. 208/36/2012-CX.6 dated 1st
January 2012 (Circular No 967/01/2013-CX) commonly known in tax circle as the “draconian
circular” was meant to initiate recovery proceedings against confirmed demand
during the pendency of stay application. Circular has been justified on the
basis of 1994 Supreme Court case Collector of Customs, Bombay v Krishna Sales (P)
Ltd [1994 (73)ELT 510 (SC)] which stated that mere preferment of appeal itself
does not operate as a stay.
The Indian Express,
New Delhi in its news article dated 22-11-2012 mentioned the growing stress to
meet the budgetary tax collection target on CBEC[1].
However no one could have imagined the search of a new strategy in December
2012 would result in a circular in January 2013 justifying recovery during pendency
of stay application which has overlooked umpteen number of case law rejecting
recovery pending the stay application [Kumar Cotton Mills case[2]
primarily among many others]. The victims of the circular are mostly
small and medium scale industries and poor tax lawyers, however funny that may
sound. Circular has lead to many situations including recovery notices being
issued with direct attachment of bank accounts. This has lead to a unhealthy tax
collection whereby individuals and small scale industries are required to pay
huge amounts in tax even before their matter is heard whereas big corporate escape
their liabilities through writs filed in HC. Even CESTAT will not entertain the matter unless
recovery notice is issued since they are heavily burdened with the pending
matters from the normal list itself. And when recovery notice is issued and
matter is mentioned before CESTAT, the date for hearing given will be a date
after one month. By the time any one hears the matter, assesse has already lost
lakhs. So unless you have money enough to reach the appropriate authority, tax
confirmed through order in original or order in appeal, however inappropriate, will be recovered within the 30 days allocated.
