Recovery proceedings - Circular dated 1-1-2013 - A detailed and elaborated decision upholding the circular in part only.

2013 (5) TMI 622 - GUJARAT HIGH COURT

Recovery proceedings - circular dated 1-1-2013 - power of the board (CBEC) - recovery during the pendency of appeal before appellate forum - held that:- condition Nos. 3, 6 and 9, if read rigidly, fail to clear the test of reasonableness and thus fall foul to Article 14 of the Constitution. - there would be situations where for no fault of the assessee a stay application filed before the appellate forum may not be disposed of within 30 days of its filing. In such a situation, the said conditions would not require the recovery officer to initiate recovery proceedings. However, if after filing of stay application, it is found that the assessee is prolonging the hearing thereof or for some such similar reasons attributable to the assessee stay application is lingering, surely it would be open for the Revenue to proceed with the recovery irrespective of pendency of appeal and the stay application. - Decided against revenue.

Regarding second appeal before tribunal when commissioner (appeals) reject the first appeal - held that:- to provide that recovery should commence immediately after the order is passed by the Appellate Commissioner, in our view, would not be permissible. - to provide that as soon as the order is passed by the Commissioner confirming the duty demand made by the adjudicating authority, the order should be executed without any leverage would give rise to large number of cases which would travel to the High Court at such an interim stage. We are not inclined to accept a situation where such unnecessary litigation would arise. - Condition No. 10 insofar as it provides for immediate recovery as soon as the order is passed in appeal also needs to be read down as to permitting reasonable time to the assessee to seek protection from the appellate forum. This period of reasonable time must be judged in the facts of each case and cannot be equated with full period of limitation. - Decided partly in favor of revenue.

Regarding appealable orders either before the High Court or the Supreme Court - held that:- The period of limitation prescribed for filing such appeal is 180 days. The Central Excise Act or the Customs Act nowhere envisages that for the entire period of full 180 days of limitation, even at the stage of third appellate stage, the Revenue must stay its hand off. We, therefore, uphold Condition No. 11 without any modification. - Decided in favor of revenue.

Protection of the interest of revenue - held that:- It would be highly desirable that the Appellate Commissioner and the Tribunal bestow their utmost consideration to the application for pre-deposit waiver and dispose of them as quickly as possible. While considering the question of waiver of pre-deposit, it is within the jurisdiction of the appellate forum to impose such conditions as deemed fit to safeguard the interest of the Revenue. - If the authorities fail to discharge their statutory functions, the High Court will be unnecessarily burdened with the hearing of the cases which are required to be heard by the statutory authorities constituted under the relevant Statutes, and the Legislative intention may be frustrated.

Appellate authorities directed to pass appropriate orders on the stay applications expeditiously and preferably within four weeks of such application.

None of the clauses of Circular, dated 1-1-2013 cover such a situation where having granted stay, the Tribunal could not dispose of the appeal within the period of 180 days and therefore, stay would be vacated. This circular is also not part of the specifically rescinded circulars mentioned in para 1 of the impugned circular. In our view, it would also not be covered under the description of any other circular, instruction or letter contrary to the said circular. In that view of the matter, the said circular dated 26-5-2010 would continue to operate in the limited field occupied by the said circular irrespective of the fresh guidelines dated 1-1-2013.

We wonder why in the present day of advanced technology, the Department should be groping for latest information and current status of assessees further appeal proceedings. Surely, with proper inter-departmental cooperation and computerization and utilization of such technology, the Department should be in a position to track every appeal before the Appellate Commissioner or the Tribunal and the precise stage at which such proceedings are pending, including the reason for such pendency. This, of course, is an issue which the Department needs to address itself internally and we leave it to them.

Decision on individual Special civil applications - in most of the cases, stay application was pending for no fault of the assessee.

2013 (5) TMI 622 - GUJARAT HIGH COURT - GUJARAT STATE FERTILIZER CO. LTD. Versus UNION OF INDIA