Look at the quality of adjudication and appellate orders passed by the officers and you will at once know that forcing the taxpayers to pay the demanded duty in one month even before a stay application is disposed of, is nothing but sheer arm-twisting. The new circular - Circular no 967/01/2013-CX dated January 1, 2013 of the Board, (widely repudiated in the media), which tightens the recovery norm - is patently unfair and ham-handed. If you think it is too strong a statement, see the following figures.
Minister of State for Finance, S S Palanimanickam in a written reply to a question in the Lok Sabha on September 5, 2012 gave the following figures for the success rate of revenue's cases.
The success rate is pitiable. In plain terms, 84 per cent of departmental orders are set aside at Tribunal stage, 70 per cent in high court stage and 90 per cent in the Supreme Court. He also said Rs 86,000 crore were held up in court cases. But it should not give the impression that the government will get this much money, if the litigations are finalised. It will only get about 10-15 per cent of this amount which may be about Rs 12,000 crore, if all cases are decided, which is not possible.
Now, let us see what the circular says. It says if an appeal has been filed with the stay petition, the following is to be done. "Recovery to be initiated 30 days after filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any, whichever is earlier." Effectively, this means even if the stay petition is not disposed of, the recovery is to be effected. In practice, the appellate commissioner and tribunal do not dispose of stay petition for months and months. There are so many reasons for that. The taxpayer is not responsible for them.
Once paid, the money is not refunded. The revenue then takes the plea of Unjust Enrichment to delay and deny the refunds. Unjust Enrichment is the most litigated subject. So the taxpayers rightly believe that once paid, the due refund is next to impossible to get from the Department. The law regarding stay petition as in Sections 35 B and C cannot be completely disregarded by CBEC as if it does not exist. And the Supreme Court judgment quoted in this circular was in a Customs case for detention certificate where the stay application was not an issue at all and was never argued.So, in summing the position is that the taxpayers have more than about 85 per cent chance of winning the cases. And yet because of the appellate commissioner and tribunal's failure to dispose of the stay petition in time, they have to pay huge sums of money, which will be impossible to get refunded due to the "ghost" known as the theory of Unjust Enrichment.
Following should be done by CBEC to realise arrear with fairness.
1. In practice there are many six-month and one-year-old cases pending for realisation. First realise those amounts and then touch the one month old cases. There is something called prioritisation and tact.
2. Ask the appellate commissioners bluntly to dispose of the stay petitions in a month. They are under the Board.
3. Fill up four vacancies of tribunal members.
4. For more than Rs 20 lakh worth of cases, secretary, revenue, should be able to request president, tribunal, to fast track the hearing on stay petitions by making a special bench or special arrangement for stay only.
5. Finally, introduce Quality Audit to improve the quality of orders passed by the adjudicators so that the Revenue does not lose 85% of cases. The orders must gain credibility and respectability.
I agree that in respect of high court and Supreme Court cases, the revenue should pursue the cases immediately as the decision there takes too long.
Conclusion - What I wrote above is to show it is possible to realise arrear in a more sophisticated and tactful manner without losing the goodwill of the whole class of taxpayers.