Key Points
The Central Board of Indirect Taxes and Customs (CBIC) has asked its field formations to not initiate recovery within three months of serving a tax notice, asking them to strike a balance between the interest of the revenue and ease of doing business...
Only in cases where there is risk of closure of business or an impending insolvency, the field formations can initiate recovery before the mandated period after getting a nod from the jurisdictional principal commissioner, the CBIC said in a letter dated May 31 to all the zonal heads...
"It is implicit that such directions for early payment of the confirmed demand should not be issued in a mechanical manner, and must be issued only in cases where interest of revenue is required to be safeguarded due to specific apprehension/circumstances in the said case," the CBIC said in the letter...
"Such reasons could include high risk to revenue involved in waiting till the completion of the three-month period due to apprehension that the concerned taxable person may close the business operations in near future, or due to possibility of default by the taxable person due to his declining financial conditions or impending insolvency, or likely initiation of proceedings under Insolvency and Bankruptcy Act, etc," the board said..
The letter was written after the board noted that many tax officers were abusing the exceptional case clause, initiating recovery proceedings before the expiry of the specified three-month period, even in routine cases, forcing the companies to move courts to seek stay on the recovery process..
