The Central Board of Excise and Customs (CBEC) has clarified on recovery of confirmed demand of tax during the pendency of stay application in relation to indirect taxes and said where stay 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. CESTAT is Customs, Excise and Service Tax Appellate Tribunal.
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.
An official press releases says that law on the issue was amended on August 6, 2014, where after filing of appeal requires payment of 7.5 or 10 per cent of tax demand, depending on stage of appeal, obviating the need for appellate authority to hear any stay application.
The CBEC circular further provides that in cases where demand is confirmed by CESTAT or the High Court recovery proceeding may be initiated after a period of sixty days from the date of the order provided that no stay is in operation.
The 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.