Recovery notice during pending appeals cannot stand without fair consideration of stay applications and time to approach the appellate forum.

A recovery notice issued during the pendency of appeals and stay applications was held unsustainable where it was based on the CBEC circular dated 1 January 2013. The applicable recovery guidelines had already been read down to require the revenue to consider whether delay in disposal of the stay application was attributable to the assessee and to allow reasonable time to approach the appellate forum before coercive recovery. As the appeals were filed within limitation, the stay applications remained undecided for a long period, and the notice was issued without awaiting that consideration, the notice was quashed and the consequential attachment was set aside; recovery of the confirmed demand was stayed pending disposal of the appeals.

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Issues: Whether a recovery notice issued during the pendency of appeals and stay applications could be sustained when the revenue acted on the basis of the CBEC circular dated 1.1.2013.

Analysis: The impugned recovery notice was founded on the guidelines in the CBEC circular dated 1.1.2013. The applicable principles had already been settled in earlier connected petitions, where the conditions governing recovery pending appeal were read down to require the revenue to examine whether the delay in disposal of the stay application was attributable to the assessee and to allow a reasonable time to approach the appellate forum before coercive recovery was initiated. On the admitted facts, the appeals had been filed within limitation, the stay applications remained undecided for a long period, and the recovery notice was issued without awaiting such consideration. The attachment that followed the notice was only consequential.

Conclusion: The recovery notice could not be sustained and was quashed, and the consequential attachment was also set aside. The appellate commissioner was directed to dispose of the appeals by the specified date, and recovery of the confirmed demand was stayed till then.

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