FEBRUARY 14, 2013

By P Rosi Reddy, Advocate

THE CBEC is making all efforts to fill the Government coffers in the form of Circular No. 967/1/2013-CX relating to recovery of confirmed demands during pendency of stay applicationa. It is a well known fact that most of the orders passed by the adjudicating authorities struggle to survive at the appellate stage.

The new circular, therefore, triggers more litigation.

It appears that this circular for recovery of confirmed demands during pendency of stay petition was apparently issued in haste. Hitherto, action to recover confirmed demands by coercion was not resorted to if the stay petition was pending.

The intention of Government in issuing the circular is obvious i.e to recover confirmed duty by denying/preventing the assessee the benefit of due process of law. The tax payers feel that the circular is draconian. In several States where VAT is implemented, there is a condition to deposit 12.5% of the tax demanded and file appeal if it is a first stage appeal and 50% in the second stage appeal.

The intention of Government to realize revenue can easily be met by adopting the following two methods which I would suggest:-

Method-I.

(i) Following the State VAT model, the Government can put a precondition to deposit 10% of duty demanded in the order before preferring an appeal to Commissioner (Appeals) and the rest of the duty is deemed to be stayed till the final order is passed by the Commissioner (Appeals).

(ii) In respect of appeal to CESTAT against the order of the Commissioner the condition to deposit 20% of duty demanded at the time of preferring appeal would meet the ends of justice.

(iii) In case of appeal to CESTAT against the order of the Commissioner(Appeals), there should be a condition that the appellantshould deposit an additional 20% of duty demanded.

Method-II.

The assessee may also be given an option to prefer an appeal to the appellate authority without payment of any pre-deposit with stay application and in such a situation, the new Board Circular should be made applicable.

If the above suggestion is followed, the Government would be spared of the criticism and it is in the interest of both the Government and the assessee. It will also go a long way in rebuilding the mutual trust betweenthe Government and the taxpayer and the Government would get its due share of revenue without litigation or with minimum litigation.

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