Krishna Sales was against Revenue - First Hang; then Wait for Appellate Order
THE celebrated Krishna Sales case, which the Board relies on to justify the above draconian circular, was actually against the Revenue. In that case, the Customs Authorities refused to release the goods in spite of the importer winning in the Tribunal on the ground that the Department has appealed against the decision of the Tribunal. In such a circumstance, the Supreme Court observed, "If the authorities are of the opinion that the goods ought not to be released pending the Appeal, the straight-forward course for them is to obtain an Order of Stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an Order, they cannot refuse to implement the Order under Appeal. As is well-known, mere filing of an Appeal does not operate as a Stay or suspension of the Order appealed against."
The Board wants to use these adverse comments against it to harass the assessees now.
Suppose somebody is given the sentence of hanging by a High Court and he appeals to the Supreme Court. Will the Government hang him before the Supreme Court can grant a stay?
Or if somebody who is in jail is acquitted by a High Court, will the Government continue to keep him in jail because the Government has gone in appeal?
You may say revenue cases cannot be compared to imprisonment and death sentence. No, they cannot be compared - this is even worse. If you kill a man (legally after a death sentence), you kill an individual and may be you inflict misery on his near ones, but if you kill an industry, you kill a society and you leave marks of your fiscal cruelty for years. That is exactly what is going to happen if the Board is serious about the Circular.
What is going to happen? For Show Cause Notices where the demand is less than Rs. 50 lakhs, Assistant/Deputy Commissioners, Jt/Addl Commissioners will routinely confirm the demands even if the law, Board Circulars and Supreme Court judgements are in favour of the assessee. The assessee files a stay petition before the Commissioner (Appeals) who will order pre-deposit of the entire duty. If you cannot pay this, he will dismiss the appeal. Before you can say CESTAT, the officers of the Department will swarm your place with attachment orders threatening to sell your properties. If you pay 50 lakhs, you are doomed. If you don't pay 50 lakhs, you are still doomed.
If the demand is for more than Rs.50 lakhs, it can be anything running into hundreds of crores, the Commissioners also confirm the demands, because they are afraid to drop demands running into Crores. The demands can be atrocious, illegal and outright perverse - but a Commissioner's order is to be obeyed. You can never get a stay from CESTAT within 30 days and the department wants its illegitimate money.
These are not hypothetical situations. Do you remember Customs issued notices to DTA suppliers of SEZ units demanding export duty for goods supplied to SEZs and Excise issued notices to the same assessees denying CENVAT credit on the same clearances? Even now, some notices are being issued. The procedure is simple. Audit raises an objection, department issues a notice, notice is confirmed, appellate authorities are not functioning and you are forced to pay up huge amounts.
You can certainly enforce your demands and protect revenue - if you can make your adjudicators write fair, reasonable or at least legally valid orders.
These measures don't seem to be to collect revenue - they are meant to harass the trade and maybe ultimately get them to close down business. You can't do more harm to Revenue than this.
There seems to be a strong message for future. You must manage your case appropriately at the very first stage of adjudication.
DDT's HORRORSCOPE was not for humour - the horror is here and now - Happy New Year!
PS: In a recent judgement delivered a few days ago, the AP High Court directed the Revenue not to initiate or pursue any coercive steps against the petitioner (or others who owe dues to the petitioner) under Section 87 of the Finance Act, 1994 or any other appropriate provision, till disposal of the petitioner's applications for condonation of delay and for grant of interim relief in the appeal preferred by the petitioner to the Tribunal on 26-9-2012. ()