CBEC and Government Determined to Kill Small Assessees?
IT is always the small businessmen who have to bear the might of the Government, more so in the Indirect Taxes Department of the Central Government. Even the recent New Year Bomb from the Board on Recovery of confirmed demands stands testimony to this theory.
Let us take a live classic example.
Two Companies A and B manufacture the same product P. As per the Board clarification and Supreme Court judgement, the Product P attracts a nil rate of duty. But recently, a Commissioner felt that he was not bound by the stupid clarifications of the Board and the wrong orders of the Supreme Court. So, he revived an issue that was settled by the Apex Court and the Apex Board long ago. Show Cause Notices came to be issued to both the assessees A and B. Demand from A was Rs. 20 Crores and demand from B was Rs. 4 Lakhs. A was to answer the Show Cause Notice to the Commissioner and B was asked to answer to Deputy Commissioner. Both gave identical replies (they had the same lawyer). And both the adjudicating Authorities confirmed the demands with equal amounts of penalty and consequent interest. What happened to them after that was not identical.
‘A' went in appeal to the CESTAT and got an absolute stay and waiver of pre-deposit, because Tribunal could easily understand that the case was covered in favour of the assessee by the Board Circular and Supreme Court judgement, which the Commissioner had the audacity to brush aside.
‘B' appealed to the Commissioner (Appeals) who did not find any prima facie case and ordered pre-deposit of the entire duty and penalty. The assessee told him that in an identical case in respect of a giant assessee, the Tribunal had granted absolute stay, but he was not impressed. He wrote that stay orders have no precedential value. Because the assessee could not comply with the atrocious order of the learned Commissioner (Appeals) to deposit Rs. 8 lakhs, his appeal was dismissed. Immediately the Central Excise officers swarmed all over him demanding that he pay up the eight lakhs or face attachment. He told them that his neighbour manufacturing the same product and who had a turnover of 100 Crores is not asked to pay up. They politely told him that the neighbour has a stay from the Tribunal - you also go and get a stay. The poor assessee who is not able to pay his workers is forced to pay a lawyer to appeal to the Tribunal. (He started the business after being assured that there is no Central Excise Duty on his product). After he filed his appeal in the Tribunal, he found that the Tribunal is not functioning regularly as they don't have enough Members. In the meantime, the Central Excise Officers harassed him so much that he paid up Rs. two Lakhs. Finally, the Tribunal remanded the case to the Commissioner (Appeals) with a direction to hear the appeal without pre-deposit. Rs. 2 lakhs were already extracted from him! He is back with the Commissioner (Appeals), but now he finds that the Commissioner has been transferred and there is nobody posted in his place. Meanwhile, the Central Excise Officers are after him to collect the remaining six lakhs. Unable to bear the tension, he has closed down his factory - but that is only the beginning of new troubles for him. Even now, the Central Excise officers don't leave him alone - they threaten to attach his bank accounts and personal property. Finally, in helpless exasperation, he told me, "I feel sorry for these officers - they will see the worst hell for harassing me like this!"
This is the plight of the small assessee and this is prior to 1.1.2013.
After 1.1.2013, things are different. Immediately after you lose the first stage of appeal, you are required to pay up all those atrocious unrealistic demand! Thanks to Board Circular 967/01/2013-CX dated 01.01.2013.