Letter, dated 19-10-2012

Filing of SLP against the vacation of stay of recovery proceedings granted by the Karnataka High Court in the case of Kingfisher Airlines

What this is

Letter, dated 19-10-2012 was issued by the Central Board of Direct Taxes on 19 October 2012. Its subject is Filing of SLP against the vacation of stay of recovery proceedings granted by the Karnataka High Court in the case of Kingfisher Airlines.

What it does

Directs that a special leave petition be filed against the Karnataka High Court's vacation of the stay on recovery in the case of an airline. At a joint meeting of the two Boards on 10 October 2012 it was recorded that the High Court, by its order of 26 September 2012, had restrained the Department from making further recovery and permitted the company to operate its accounts, in consequence of which the income-tax attachments on its bank accounts were lifted. The Chief Commissioner at Bangalore is to move a proposal for the special leave petition, and that proposal is to carry the details of the service tax dues as well, obtained from the indirect tax Board, so that the court is apprised of the magnitude of the dues to the Government.

Why it was issued

The joint meeting was convened on the steps to be taken for recovery of taxes due from the company after the High Court's order lifted the attachments.

Who it reaches

Assessees whose bank accounts stand attached for recovery
Assessees who have obtained a stay of recovery from a High Court
Officers preparing recovery and appeal proposals in large-demand cases

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Filing of SLP against the vacation of stay of recovery proceedings granted by the Karnataka High Court in the case of Kingfisher Airlines
letter, dated 19-10-2012
Kindly refer to the above.
2. In this regard, I am directed to submit as under:
A Joint meeting of CBEC and CBDT was held on 10th Oct., 2012, under the Convenorship of Chairperson, CBDT regarding appropriate steps to be taken for recovery of taxes due from M/s. Kingfisher Airlines Ltd. (KFA). It was informed that the Karnataka High Court vide order dated 26-9-2012 have restrained the Department from making further recovery and have permitted KFA to operate their accounts. As a result, the Income Tax Department has lifted the attachments of various bank accounts of KFA.
3. Accordingly, it has been decided in the meeting that a proposal should be moved by the CCIT(CCA) Bangalore for filing SLP against the vacation of stay of recovery proceedings granted by the Karnataka High Court. The SLP proposal should also contain the details of service tax dues against KFA (requisite details may be obtained from CBEC) so as to apprise the court of the magnitude of pending dues to the Government.
4. In view of the above, it is requested that the needful may be done at the earliest and report be submitted to the Board.
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What to watch

The letter shows the Department combining direct and indirect tax dues in one presentation to the court, which is the tactical point in a large-demand recovery matter.
It is an internal direction to move a proposal; it decides nothing about the demand or the stay.
An order restraining further recovery led directly to the lifting of the existing attachments, which is the practical consequence such an order carries.

Where you meet it

When a stay of recovery has been obtained and the Department seeks to have it vacated, or in resisting a special leave petition against a stay.

← Letter [F.NO. 279/M - 73/2012-ITJ], dated 25-10-2012 · Circular No. 09/2012 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.