CBEC order to reopen cases where Tax demand stayed

Directions form part of revenue maximisation measures.

The Central Board of Excise and Customs (CBEC) has directed its field formations across the country to open all cases, irrespective of year and amount involved, where it had raised a demand but had these stayed by courts, otherwise known as call-book cases. 

The directions form part of revenue maximisation measures by the department through ways other than tax collection in this financial year.

Usually, the tax demand raised by the department gets stayed in courts or at appellate levels in the department itself. Officials involved in the exercise said the new directive it will have wide implication for revenue, since the Board estimates about Rs 30,000 crore was stuck in such cases as on June 30. Thus, if such cases are reviewed and demand is raised before March 31, 2010, it will add to revenue collection substantially. 

“This is a major step to maximise revenue at a time when indirect tax collections have dipped due to lower tax rates fixed for companies following fiscal stimulus by the government to help industry recover. The objective of this exercise is to avert a stay, so that the assessee pays first and then fights the demand in court if it so prefers,” said an official. Officials added that the department is expected to finish opening up all cases and serve demand notices to the companies before March 31. 

Other than the call book cases, the board has also directed all chief commissioners to scrutinise all cases where the demand is more than Rs 50 lakh, irrespective of the year in which it was booked, and has not been recovered due to litigation. In such cases, after the review, the department will fix fresh demand and then serve notice for recovery. As a one-time measure, the board has also proposed that departments review all cases where demand is difficult to revover or non-recoverable cases, for writeoff by the authority concerned and recover whatever dues are possible. 

The Board, in a note to the departments, has observed that 90 per cent of the cases get stayed in the Customs, Excise and Service Tax Appellate Tribunal (Cestat). Therefore the board had suggested empanelling counsels of repute, seeking a designated bench in courts for early decisions and a two-member review committee of chief commisioners to decide on Cestat orders before filing an appeal in the High Court or Supreme Court.

The note says there are 61,200 cases involving an arrear demand of Rs 31,500 crore as on June 30, 2009. In this, 20 per cent of cases accounting for 38 per cent of revenue got a stay, 32 per cent of cases with 34 per cent of revenue were restrained by the debt recovery tribunal, 12 per cent of cases with four per cent of revenue were non-recoverable, while revenue could be recovered from 36 per cent of cases accounting for 24 per cent of revenue without any additional burden.