CBIC Issues Master Circular on Recovery and Write-offs of Arrears of Revenue

The apex indirect taxes body on 19 January 2022, published detailed guidelines for the recovery of arrears and write-offs in order to prevent multiplicity of recovery processes by various tax authorities and to minimise the scope of harassment for taxpayers or delay on the part of officials. The master circular enumerates a step-by-step process for the recovery and write-offs of revenue arrears by attachment of property and sale, setting a deadline of six months to complete the process.

In the circular, the Board states that “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”

For the purpose of recovery of departmental arrears, the circular prescribes that the claim can be filed with the Debt Recovery Tribunal either through direct application or through SARFAESI to prevent multiple claims and proceedings concerning the property.

The circular also maintains that in case of a bankrupt defaulter, tax officers shall not make any tax claims after the date of winding up order of a company has been set. The request for such a claim should be done within 30 days of commencement of liquidation.

The master circular supersedes at least 8 different previous circular instructions and shall be instrumental in ensuring that every officer follows the same set of protocols; thereby making the process transparent, uniform and beneficial to the interests of the relevant stakeholders in the process.