Relief for taxpayers: No recovery during pendency of stay

New Delhi: In a relief to tax payers, the government has asked taxmen not to proceed with recovery of a 'confirmed' demand in relation to indirect taxes during pendency of stay applications.

The Central Board of Excise and Customs (CBEC) on Monday issued a circular on 'Recovery of Confirmed Demand of Tax During the Pendency of Stay Application' in relation to indirect taxes.

Confirmed demand of tax arises, when after examining the submissions of a tax payer, an order is issued confirming demand of tax from a tax payer.

"The circular provides that in cases where stay application is pending before Commissioner (Appeals) or CESTAT for periods prior to August 6, 2014, no recovery shall be made during the pendency of the stay application," an official statement said.

The government in August 2014 amended the law to provide for a requirement to pay 7.5 percent or 10 percent of tax demand after filing of appeal. The amount to be deposited depended on stage of appeal, "obviating the need for appellate authority to hear any stay application," it said.

The circular further provides that in cases where demand is confirmed by CESTAT or High Court recovery proceeding may be initiated after a period of 60 days from the date of the order provided that no stay is in operation.

"The said circular has been issued to ensure that the assessee gets adequate opportunity to appeal before recovery proceedings are started in indirect taxes. The circular would also bring uniformity in practice regarding recovery of confirmed demands of tax," the statement added.

Nitish Sharma, Partner, Nangia & Co said, "The circular have objectively clarified and provided for guiding principles to revenue in liberalising the time period for recovery of confirmed demands on matters of litigation."