2014 (9) TMI 698 - AT - Service Tax

Extension of stay order - power of tribunal - extension beyond the period of 180 days or 365 days in all - Held that - In the present case partial waiver of pre-deposit was granted in three stay applications in an equal number of appeals, on condition of deposit of the specified percentage of service tax assessed within the specified period, during the pendency of the appeals or for a period of six months, whichever is earlier, on 20-9-2012. The present application is filed seeking extension of that order, on the ground that the period of 180 days has elapsed from the date of the initial grant. The appeal could not be disposed of, not on account of any delay tactics adopted by the petitioners/appellants but on account of the pendency of a large number of much older appeals. It is ordered that the waiver of pre-deposit and subject to the conditions stipulated therein, granted by the order dated 20-9-2012 (which have been fulfilled), shall operate during the pendency of the appeal. - We further order stay of all further proceedings for realisation of the balance adjudicated liability, for a period of six months or till the disposal of the appeal, whichever is earlier. - Decided in favor of assessee.

Summary

Issues:
Extension of stay beyond 180 days - Legality and authority of the Tribunal.

Analysis:
The judgment discussed the extension of stay applications beyond the initial 180 days. The Tribunal had initially granted waiver of pre-deposit for a period of six months, subject to conditions. The judgment of the Allahabad High Court highlighted the need to avoid granting indefinite waivers as it could be misused by the assessee. The High Court directed the Tribunal to decide appeals expeditiously and held that waiver of pre-deposit would be valid until six months from the last extension. The Tribunal, in its analysis, emphasized caution against indefinite stays to prevent possible abuse by appellants.

The Tribunal acknowledged the huge pendency of cases, including Service Tax appeals, and the lack of resources to dispose of appeals within 365 days. It referenced the Supreme Court's judgment in Kumar Cotton Mills Pvt. Ltd., stating that the Tribunal retains the authority to extend stays beyond 365 days in cases of backlog, not due to the appellant's delay tactics. The judgment clarified that the pre-deposit requirement under Section 35F operates during the appeal's pendency without a prescribed sunset period.

Regarding the authority to grant stays, the Tribunal explained that the power is inherent in hearing and determining appeals. Section 35C of the Central Excise Act limits the vitality of stays granted by the Tribunal. The second proviso mandates vacation of stay if an appeal is not disposed of within 180 days, while the third proviso allows extensions up to 365 days. The Tribunal interpreted these provisions as cautionary rather than inhibiting the grant of extensions or fresh stays after 365 days.

In conclusion, the Tribunal granted an extension of the waiver of pre-deposit and stay of proceedings based on the circumstances of the case. It ordered that the waiver would operate during the appeal's pendency and stayed further proceedings for a specified period or until the appeal's disposal, whichever is earlier. The judgment highlighted the need for a purposive construction of stay provisions to balance the interests of appellants and the efficient disposal of cases.