Tax assessees who have appealed against the excise department’s tax demand but have not got a stay order from the appellate authorities concerned within a month may now face recovery proceedings.
According to a recent circular by the Central Board of Excise and Customs (CBEC), the excise department can initiate recovery process 30 days after an assessee files an appeal along with a stay application, if no stay is granted or after the disposal of the stay petition, whichever is earlier.
According to experts, the earlier circulars, which have now been superseded, had a time limit of six months in case of stay application.
The new rules will come into play in case of appeal lying before the Commissioner (Appeals) or the Custom Excise & Service Tax Appellate Tribunal (Cestat).
The move has drawn flak from tax experts. Bipin Sapra, tax partner, Ernst & Young, said assessees do not have control over the timing of the tribunal or court order on their stay petition. So, if a person has filed a stay application, his recovery process should start after the order comes, said Sapra.
He added that it usually takes three to six months for the appellate authority to issue an order on stay of recovery process. “The circular will cause administrative issues for the tax payers who have filed appeal and stay application but have not received any order. Since the tax payers have no control over the tribunal/courts to decide their stay petition within a given time, the initiation of recovery proceedings would create hardship to the tax payers,” said Sapra.
According to the CBEC circular, in case no appeal is filed or an appeal is filed without a stay application, recovery process could be initiated after 60 days - the time given to assessees to file the applications.
The circular said, “A confirmed demand remains an order in operation till it is stayed. Mere preferment of appeal itself does not operate as a stay.” CBEC also quoted a 1994 Supreme Court ruling that “mere filing of an Appeal does not operate as a stay or suspension of the Order appealed against”.
Sapra said he agrees with the Supreme Court order. However, the order talked of filing of appeals and not stay applications, he explained.