BUDGET 2014 - Stay Syndrome - Relief
TIOL thanks the Government for the huge relief given in pre-deposit in appeals before the Commissioner(Appeals) and the Tribunal. We have been relentlessly crusading for this reform for quite some time.
DDT 2286 - 04 02 2014, submitted,
It is high time that we seriously think of doing away with this anarchy called pre-deposit, which is causing irreparable damage to the Industry and Trade.
Pre-deposit is really not required now, because if the assessee loses the case ultimately, he has to pay the tax/duty with 18 percent interest and this is a wonderful investment for the Government. No Government investment brings in at least a third of that kind of returns.
Even if total waiver cannot be given, let us fix pre-deposit as a standard 10 percent of the duty/tax demanded with absolutely no discretion to any appellate authority- then appellate authorities, especially the Tribunal need not waste its time on Stay matters and final matters can be taken up and perhaps they can be decided in a couple of years.
This is the best time for the Industry and Trade bodies to influence the political parties to bring in law providing for little or no pre-deposit. Political parties are offering all kinds of sops like free electricity and colour TVs to voters - with the taxpayers' money. It is time that the real taxpayers also demand and get some relief (at least a little less harassment). After all you give a lot of money to the politicians - make them listen to your woes - at least during elections.
DDT 2390 - 07 07 2014 commented,
No civilised country would perhaps have such draconian laws. Draconian laws survive not because of the tyranny of the rulers, but because of the meek acceptance of the victim subjects. This dangerous provision has been in the Statute for more than a decade - nobody took it seriously, as Tribunal Benches were fair and just in giving stay and now if it is held that the Tribunal had no business or rather the power to give stay beyond 365 days, the Indian Business is doomed.
Mr. Arun Jaitley is a learned lawyer and he would certainly understand this issue, if explained to him properly.
He is and he did.
Now you have to pre-deposit 7.5 percent for appeals to the first appellate authority and another 10 percent for a second appeal. There is no requirement of getting a Stay and then getting it extended after 180 days and then getting doomed after 365 days. The issue whether the Tribunal can grant stay beyond 365 days is before the Larger Bench of the Tribunal, various High Courts and even the Supreme Court. All those cases will become irrelevant - at least prospectively.
Now, the Tribunal can really concentrate on the work, it was created for - deciding appeals - instead of stay and waiver applications.
The statutory amendments raise several questions though:
Many of our distinguished contributing authors have expressed a fear that, notwithstanding the amendment, Department can still proceed with recovery as the pre-deposit is only a pre condition for appeal and not a stay against recovery. Let us hope when the Bill is enacted, it would be statutorily clarified that no recovery proceedings can be initiated when the appeal is pending.
There is a doubt on payment of another 10 percent for the second appeal. Though the TRU letter states that another 10 percent, the amendment does not say so clearly. So, there is a doubt whether the pre-deposit at the second appellate stage is 10 percent or 17.5 percent. Even if it is 17.5 percent, what will happen to the 7.5%deposited with the Commissioner (A)?. Shouldn't that also be considered as pre-deposit? This also needs clarification statutorily.
Pre-deposit of penalty or duty or both: As per the amendment, pre-deposit is a percentage of the duty or penalty or both. Who will decide whether duty or penalty or both have to be paid? Does the appellant have a choice?
Can Tribunal still grant waiver? Paying 10 percent of the duty or penalty may still be difficult for some assessees. Do they lose the opportunity of appealing? There are several closed companies with no assets, who are stuck with huge demands from the department. What will they do? In case of firms and companies, Commissioners are fond of imposing huge penalties on several employees of the company. Now, each one of them will have to pay a pre-deposit of 10/7.5 percent of the penalty. You may remember the classic case of a crazy Commissioner who imposed a penalty of Rs. 50 Crores on an employee of BHEL. In the new regime, if this employee wants to appeal to the Tribunal, he has to make a pre-deposit of Rs. 3.75 Crores and if he cannot raise that kind of money, he owes the Central Excise Department a whopping Rs. 50 Crores! So, there must be some mechanism for the Tribunal to waive pre-deposit in exceptional cases and individual employees and directors should be exempted from pre-deposit if the main appeal is filed by the company/firm.
Let us hope these changes would come in the Finance Act. A good Government that has gone this far should take that extra step.