WE never imagined our Tax horror-scope would be a reality in less than 24 hours. (Please see yesterday's DDT) CBEC has issued its first Central Excise Circular on arrears recovery during pendency of Stay applications. The circular has rescinded seven previous circulars on the subject matter. Suddenly, the Board has noticed a Supreme Court judgement delivered in 1993 in case of Krishna Sales (P) Ltd 2002-TIOL-428-SC-CUS wherein the Court observed that "As is well known, mere filing of an Appeal does not operate as a stay or suspension of the Order appealed against". So, the Board has come to a conclusion that their predecessor Chairmen/Members did not know how to read Court Judgements and had issued some useless Circulars, which are now rescinded.Now, a fresh circular on how to deal with demands against which stay applications are pending before the Appellate forums, is issued.
According to the latest Circular, if a stay application is filed before the Commissioner (Appeals) and CESTAT and if there is no stay within 30 days, recovery action has to be initiated. In case of stay applications before High Courts and Supreme Court, even this 30 days time is not available. Recovery has to be initiated immediately after the orders if there is no stay.
Perhaps the Board is not aware that there was no Bench sitting in Bangalore and Chennai CESTAT for the last several months and even now, the Bench is functional only for half of the month. How can they expect the CESTAT to dispose of all the stay petitions within 30 days? There are many places where the Commissioner (Appeals) posts are lying vacant. How can they expect the assessees to get stay within 30 days? Perhaps the Board is under the impression that stay orders are just like a ready-to-eat dish which the assessee should go, pick up and come back. All that the assessees can do is only file a Stay Petition and wait for the hearing notice.
The Circular issued by the Board lacks foresight, proper understanding of the real situation and shows utter lack of respect for established procedure and the judicial system in the country. This Circular will no doubt create lot of work for the High Courts, as many Writ Petitions will be filed against this atrocious Circular. Perhaps the High Courts should award costs on the Board for issuing such mindless directions without understanding how not to apply the Supreme Court decision of 1993 to the present situation.
When the Board has shown extreme obedience to the Supreme Court order in case of Krishna Sales (P) Ltd , why do they have total disregard to this observation of the Hon'ble Supreme Court in Kumar Cotton Mills case, which is more recent compared to the 1993 order? (2005-TIOL-42-SC-CESTAT). Is it because it just does not suit you? How can they have only selective respect for the Supreme Court judgements? Their Lordships in Kumar Cotton Mills observed that:
The sub-section which was introduced in terrorem cannot be construed as punishing the assessees for matters which may be completely beyond their control. For example, many of the Tribunals are not constituted and it is not possible for such Tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay application s are not disposed within the time specified.
Certainly, this is not the way to treat the goose that lays golden eggs for the department. They don't fill the Commissioner (Appeals) post, they don't post Members in Tribunal and they want to punish the assessees for the fault of babus! Is it the job of the assessees to fill the vacancies in CESTAT, post the Commissioner (Appeals)?
The situation in case of appeals filed in High Court / Supreme Court is worse. The orders passed by the lower authorities will be implemented immediately if there is no stay in operation. Does the Board expect the High Courts and Supreme Court to dispose of the Stay applications immediately, as directed by the Hon'ble CBEC? Are they aware of the level of pendency in these courts?
Before causing damage to the industry and embarrassment to itself, the Board should immediately do proper introspection and withdraw this draconian Circular.