Procedure for seeking waiver or reduction of interest in respect of recovery proceedings initiated for failure to pay penalty
Summary
This circular establishes the procedure for seeking a waiver or reduction of interest in SEBI recovery proceedings initiated for failure to pay penalties. It delegates authority to specific panels based on the interest amount and excludes applications involving intermediary fees or disgorgement orders. Applicants must demonstrate genuine hardship, circumstances beyond control, and cooperation, with decisions required within twelve months.
Text
Section 28A of the SEBI Act, Section 23JB of the SCRA and Section 19IB of the Depositories Act provide that during the exercise of powers for recovery of dues, provisions of Sections 220 to 227, 228A, 229, 232, the Second Schedule and the Third Schedule to the Income-tax Act, 1961... shall apply with necessary modifications.
Section 220(2) of the Income-tax Act, 1961 empowers the Recovery Officer of SEBI to recover the outstanding amount along with the applicable interest... Section 220(2A)... confers powers on the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to reduce or waive the amount of interest paid or payable.
the Board has delegated the power to waive or reduce the interest levied only in respect of recovery proceedings initiated for failure to pay penalty, to the Competent Authority provided hereunder: a) Panel of Executive Directors of SEBI, where the amount of interest sought to be waived or reduced is less than Rs. 2 crores; b) Panel of Whole-time Members, in other cases.
the Board has approved that the waiver or reduction of interest shall not be applicable in the following cases and the same shall be returned forthwith: a) where interest for failure to remit fees to the Board is levied on the intermediaries... b) where the interest on the amount directed to be disgorged or refunded is levied...
The application seeking waiver or reduction of interest may be forwarded to the Recovery Officer... in the format detailed in Annexure A; along with all documents in support of the satisfaction of requirements under clauses (i), (ii) and (iii) of Section 220 (2A) of the Income-tax Act, 1961.
The application for waiver or reduction of interest may only be sought for the period subsequent to the service of the notice of demand.
An application may be filed only in the cases where the principal amount due under the notice of demand stands fully paid.
The Recovery Officer shall place the application complete in all respects before the Competent Authority for consideration.
The order accepting or rejecting the application, either in full or in part, shall be passed within a period of twelve months from the end of the month in which the application complete in all respects is received.
No order rejecting the application, either in full or in part, shall be passed unless the applicant has been given an opportunity of being heard.
An application that is not complete in all respects or does not conform to the requirements of this circular shall be returned to the applicant.
This circular is being issued in exercise of powers conferred under Section 11(1) read with Section 28A of the Securities and Exchange Board of India Act, 1992.
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Source: SecMarx — Procedure for seeking waiver or reduction of interest in respect of recovery proceedings initiated for failure to pay penalty. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.