CBIC issues Circular on Recovery and Write off of Arrears of Revenue [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) has issued the master circular on recovery and write-off of arrears of revenue.

The Board has issued Instructions/Circulars relating to recovery of arrears under Central Excise, Service Tax, and Customs from time to time. Considering the changes that have taken place, especially after the introduction of GST in July 2017, it has become imperative to update and revamp the procedure for recovery of arrears of Indirect taxes and Customs.

The consolidated Circular is being issued providing guidelines for recovery and write-off of arrears of Indirect taxes and Customs.

The arrears are the overdue payment of the amount of tax, interest, fine, or penalty that is confirmed against a person who is liable to pay the same to the exchequer. It arises as a result of the Order-in-Original, Order of Appellate forum, like the Commissioner Appeals / ADC/JC Appeals or the CESTAT and the Courts of law.

The amount in the case under investigation, unconfirmed demands (i.e. Show Cause Notice, including those in Call Book), the Order-in-Original that has been set aside or remanded for de-novo adjudication by Appellate authority do not fall under the category of ‘arrears’.

In cases of arrears pending before SC / HC/ CESTAT, the Jurisdictional Pr. Commissioners /Commissioners will identify all cases of appeal where the department has a strong case or a reasonable chance of success and the amount involved in the arrears is more than Rs. 1 Crore.

The particulars of all such cases will be kept with the Review Cell/Legal Cell and the TRC of the Commissionerate for regular monitoring. Miscellaneous Application for early hearing, out-of-turn hearing, early decision, stay vacation, bunching of cases as per merits/ requirement should be requested. For this purpose, the Review Cell/Legal Cell will co-ordinate with the office of the Chief Commissioner (Authorized Representative)/ Departmental Counsels. The implementation of this action for each case will be reviewed every month by the Jurisdictional Pr. Commissioners / Commissioners so that any deficiencies or delay is remedied promptly.

The Recovery in many cases is restrained due to the pendency of the cases relating to the financial viability of the defaulter before the BIFR /OL / NCLT/ DRT.

Though the Customs, Central Excise, Service Tax, and GST enactments have provisions for the liability to be the first charge on the property this charge is subject to the provisions of Section 529 A of the Companies Act, 1956 (Section 326 of Companies Act, 2013), the Recovery of Debts due to Banks and the Financial Institutions Act, 1993 (RDB Act), the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Insolvency and Bankruptcy Code, 2016.

In cases pending with BIFR /OUDRT/Units taken over by Banks, the department should file affidavits for the first charge under Section 11 E of the Central Excise Act/Section 142 A of the Customs Act/Section 88 of the Finance Act, 1994 and Section 82 of the CGST Act, 2017. Besides taking aforesaid action, the cases pending in such authorities should be monitored and approached constantly for their early disposal.

The Board has directed that the act of writing off of arrear does not absolve the defaulter from the liability to pay for any new facts coming to notice in the future. Therefore, consequent action if any, should be ensured by the jurisdictional Pr. Commissioners / Commissioners and the Pr. Chief /Chief Commissioner as the case may be.

To Read the full text of the Circular CLICK HERE

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