AMIT BAJAJ ADVOCATE

CBEC has issued a circular regarding recovery of confirmed demand during pendency of stay application. It has been directed in the circular that recovery proceedings are to be initiated within 30 days after the filing of an appeal if no stay is granted.

It is well known that hearing of cases before the appellate authorities dont come within 30 days from the date of filing of an appeal as the number of appeals is huge. Thus stay application moved may also not be heard within 30 days. In such cases if recovery proceedings are initiated then it will amount to hardship to the appellent and is also against the basic rule of law audi alteram partem i.e No one should be condemned unheard.

  when the assessee filed an appeal and an application for stay of demand before Tribunal, the demand must be stayed untill the application is considered and order passed by Tribunal. There is a gap between the date on which the application for stay is filed and the date on which the stay is ordered. The Guahati High court decided that even this period is covered by stay and that the writ petition requiring that the demand should not be enforced during this period should succeed-Bongaigoan Refinery and Petro Chemicals Ltd vs CIT (2002) 256 ITR 698 (Gau.)

Thus in the above case stay was granted even during the pendency of stay application. Although the above judgement is in context of stay proceedings under Income Tax Act but some guidance can be taken while arriving at conclusion on issue in hand.

CBEC if wants the recovery proceedings to be initiated in this way as is being directed in the circular then there should also be a clear mandate in law that stay applications should be mandatorily disposed off within 30 days from  the date of its filing.

The full circular is as follows:

Circular No.  967/01/2013 – CX,  New Delhi, the Dated 1^st January, 2013

Subject - Recovery of confirmed demand during pendency of stayapplication- regarding

         I am directed to bring your attention to the following circulars issued from time to time on the above issue and to state that it has been decided to rescind these circulars with immediate effect.

2)      Henceforth, recovery proceedings shall be initiated against a confirmed demand in terms of the following order –

 3)      It may be noted that a confirmed demand remains an order in operation till it is stayed. Mere preferment of appeal itself does not operate as a stay. Hon’ble Supreme Court in case of Collector of Customs, Bombay Vs Krishna Sales (P) Ltd [1994 (73) E.L.T 519 (S.C)] has observed that “As is well known, mere filing of an Appeal does not operate as a stay or suspension of the Order appealed against”. Accordingly, the above directions are hereby issued for initiating recovery of the confirmed demands.

4)      Instructions in CBEC’s Excise Manual of Supplementary instructions on the above subject or any other circular, instruction or letter contrary to this circular stand amended accordingly.

Yours faithfully,

(V.P. Singh)