From the desk of Chairman,CBDT

S.N. 51/July 25,2011

Collection Strategy for FY 2011-12

I reviewed the arrear position yesterday in the context of our strategy to meet the collection target. On assessing the potential for recovery in different types of arrears categorized in column 9 of CAP I, I find that concerted efforts in certain categories may expedite cash collection. I suggest that our immediate approach should be to focus on the following:

• More than Rs. 20000 crore of tax demand is stayed by the courts/ITAT. Our counsels should be advised to get the stays vacated or ensure early hearings by brining the direction of the Supreme Court in the Vodafone case to the taxpayer to pay 25% of the disputed taxes and provide bank guarantee for the remaining, thereby endorsing the principle that stay of recovery in litigated matters should not be the norm, to the notice of the concerned court/ITAT.
• More than Rs. 27000 crore has been stayed by tax authorities. These stays be reviewed and as directed in the Central Action Plan 2011-2012, future initial stays should be for 3-4 months only.
• Cases of demand of Rs. 100 crore and more of companies in liquidation, should be pursued with official liquidator on priority and all possible steps be taken to speed-up the process in the courts.
• Stay application pending consideration must be disposed off immediately and cases of demand covered by installments be monitored for ensuring adherence to the installment timelines.
• An amount exceeding Rs. 60000 crore is figuring in the residual head of column 9 of CAP and I understand that a large amount is on account of TDS mismatch and pending rectifications. Such demand be cleaned up immediately.
• DG(Admn.) has sent some information obtained from various sources regarding taxpayers with demand of Rs. 10 crore and above and classified as not traceable or with no/inadequate assets. Every possible effort should be made to track the tax payers and their assets by using the information and also the clues emerging from the information, and the feed back given to the DG(Admn.) urgently.
• DG(Admn.) has sent a Proforma seeking information regarding undisputed demand, which is around 83000 crore. The information should be given after diligently verifying each case. Standing Committee on Finance in its thirty fourth report presented to the Speaker of Lok Sabha on June 30, 2011, has directed realization of these amounts within 6 months.
• Clarification/removal of deficiencies has been sought by the Directorate of Recovery in a number of write off proposals forwarded for the approval of the Board. These cases be reviewed urgently and response sent, so that further action could be taken.

Stay of recovery should not be the norm; require partial payment plus bank guarantee to enable tax collection swiftly. Prioritise accelerating recovery by limiting and vacating judicial and administrative stays, requiring partial payment with bank guarantees in disputed cases, reviewing and time limiting initial administrative stays, pursuing large company liquidation claims with official liquidators, disposing pending stay applications, cleaning up TDS mismatch demands, tracing untraceable taxpayers and assets, and furnishing verified information for prompt realisation of undisputed demand.