TMI Blog2014 (7) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal is satisfied that the matter could not be heard and disposed of by reason of the fault of the Appellate Tribunal for the reasons not attributable to the assessee. It also may not be construed that the Appellate Tribunal can extend stay indefinitely. It also may not be construed that the Appellate Tribunal can extend stay indefinitely. On expiry of every 180 days the concerned assessee / appellant is required to submit an appropriate application before the learned Appellate Tribunal to extend the stay granted earlier and the Appellate Tribunal may extend the stay for a further period but not beyond 180 days at a stretch and on arriving at the subjective satisfaction, as stated hereinabove, the Appellate Tribunal may extend the stay even beyond 365 days from the date of grant of initial stay and even thereafter. - Thus, on expiry of maximum period of 180 days the assessee / appellant is required to submit application for extension of stay each time and the Appellate Tribunal is required to consider the individual case and pass a speaking order, as stated hereinabove. - Decided partly in favor of revenue. - TAX APPEAL NO. 341 of 2014 With TAX APPEAL NO. 355 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es appearing on behalf of the revenue that any order passed by the learned Appellate Tribunal extending the stay beyond the total period of 365 days shall be without jurisdiction and hit by section 35C(2A). 3.02. It is further submitted by the learned advocates appearing on behalf of the revenue that when the legislature intended that there shall not be any stay beyond the total period of 365 days and when 3rd proviso to section 35C(2A) provides that any stay beyond 365 days stands vacated, no stay shall be extended beyond the total period of 365 days as by operation of law, after total period of 365 days, the stay granted earlier stands vacated. 3.03. Mr.Yogesh Ravani, learned advocate appearing on behalf of the revenue appearing in some of the appeals has submitted that the appeal is a creation of statute and in case a person wants to avail a right of appeal, he has to accept the condition imposed by statute. It is submitted that therefore, when the right of appeal being a creature of statute, legislation could impose condition for exercise of such right. It is submitted that neither there is unconstitutionality nor there is legal impediment for imposing such a condition. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod by the appellant. 3.07. Mr.R.J. Oza, learned counsel appearing on behalf of the revenue has submitted that even considering 3rd proviso to section 35C(2A) of the Act, it is incumbent on the part of the Appellate Tribunal to pass a speaking / reasoned order as to why the appeal could not be disposed of within a period of 365 days (total) and whether delay in disposal of the appeal is attributable to the original appellant/assessee or not. It is submitted that third proviso to section 35C(2A) which has come into effect by Sec. 98 of Finance Act 2013, if the appeal is not disposed of within the period specified in first proviso, the Appellate Tribunal may, on an application made by the party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend period of stay. It is submitted that, therefore, even stay can be extended only on subjective satisfaction of the Appellate Tribunal that the delay in disposal of the appeal is not attributable to such party - original appellant/assessee. 3.08. Mr.R.J. Oza, learned counsel appearing on behalf of the revenue has further submitted that in the present case the learned Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt dated 8/10/2013 in the case of Commissioner, Customs and Central Excise Vs. M/s. J.P. Transformers, rendered in Central Excise Appeal No.277 of 2013 by submitting that while considering the very provisions i.e. section 35C(2A), Allahabad High Court has accepted the prayer made by the department that the Appellate Tribunal could not have extended the stay order by which it has waived demand of pre-deposit indefinitely. It is submitted that the Allahabad High Court in the aforesaid decision has also observed that such an extension of order indefinitely is likely to be misused by the assessee. Making above submissions and relying upon above decisions, it is requested to answer the aforesaid questions in favour of the revenue and against the assessee. 4.00. All these appeals are opposed by Mr.Paresh Dave, Mr.Uday Joshi, Mr.Dhaval Shah and Mr.Anand Nainavati, learned advocates appearing on behalf of the respective respondents original appellants assesses. 4.01. The learned advocates appearing on behalf of the respective respondents herein - original appellants assesses have vehemently submitted that as such the issue in the present appeal is as such now not res-integr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in many of the cases, due to large number of the pending appeals and the workload assigned to the Appellate Tribunal, it is not possible for the Appellate Tribunal to dispose of the matters under the mandate of law. It is submitted that therefore, for the reasons of other administrative exigency for which assessee cannot be held liable and if there is no reason attributable to the assessee regarding delay in disposal of the pending appeal or non-cooperation and if the appeal could not be heard which is beyond control of the appellant assessee, some balance has to be made to protect the right and interest of the assessee during intervening period and the appeal remain pending before the learned Appellate Tribunal . 4.04. It is further submitted by the learned advocates appearing on behalf of the respondents original appellants assesses that when initially stay has been granted and/or order for waiver of pre-deposit fully and/or partially is passed, the same is passed by the appellate authority / learned Appellate Tribunal after applying the mind and on considering various aspects of grant of stay / waiver of pre-deposit. It is submitted that therefore, when stay has been gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rajasthan High Court); (iv) Commissioner of Cus. C. Ex., Ahmedabad Versus Kumar Cotton Mills Pvt. Ltd., reported in 2005(180) ELT 434 (SC); (v) IPCL Versus CCE, Vadodara, (2004) 169 ELT 267 (Tri.LB). 5.00. Heard the learned advocate appearing on behalf of the respective parties at length. Short question which is posed for consideration of this Court is whether the learned Appellate Tribunal can extend the stay beyond the total period of 365 days from the date of passing of the initial stay, despite the fact that the delay in disposing of the appeal within 365 days from the grant of initial stay is not attributable to the assessee? Another question which is posed for consideration of this Court is whether while extending the stay granted earlier, learned Appellate Tribunal is required to pass a speaking and reasoned order or not? 5.01. While considering the aforesaid questions, relevant provisions of Central Excise Act are required to be considered. Section 35C(2A) of the Central Excise Act, 1944 came to be introduced w.e.f. 11/5/2002 by Finance Act 20 of 2002 (20 of 2002) which reads as under : Section 35C(2A) : The Appellate Tribunal Shall, where it is possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appeal is not attributable to such party, extend the period of stay to such further period as it thinks fit but not exceeding 185 days. It also further provides that in case appeal is not so disposed of within a period of 365 days, from the date of the order referred to in the first proviso, such order shall, on the expiry of such period stand vacated. The second proviso to section 35C(2A) referred to hereinabove came to be considered by the Hon ble Supreme Court in the case of Kumar Cotton Mills Pvt.Ltd. (supra). It is required to be noted that before the Hon ble Supreme Court, the revenue was before the Hon ble Supreme Court against the decision of the Appellate Tribunal reported in 2002 (146) ELT 438 (Tri.Mumbai). The learned Appellate Tribunal in the case of Kumar Cotton Mills Pvt. Ltd., against which the revenue was before the Hon ble Supreme Court, took the view that where order on the stay application is made after 11/5/2002 i.e. after insertion of section 35C(2A), Appellate Tribunal s power to continue protection so given is not circumscribed and the Appellate Tribunal on an application being made by the applicant is competent to extend the date of coverage of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied on an application made by the assessee / appellant that delay in disposing of the appeal within total period of 365 days from the date of grant of initial stay is not attributable to such party, and despite the fact that the assessee / appellant has cooperated, the Appellate Tribunal could not, for various reasons, dispose of the appeal within 365 days, in that case, power of the Appellate Tribunal to extend stay even beyond 365 days from the date of grant of initial stay are not circumscribed. However, the same shall be subject to satisfaction of the learned Appellate Tribunal that the assessee / appellant is not at all at fault and the delay in not disposing of the appeal within total 365 days is not attributable to such assessee / appellant and that there was no non-cooperation on the part of the assessee / appellant. 5.05. It is true that in a taxing matter any provision is required to be read literal and plain meaning should be adopted, however, while interpreting such a provision Court is also required to see that it may not lead to any arbitrariness and/or is not in violation of Article 14 of the Constitution of India and by such interpretation if a person who i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first proviso, the stay order shall, on the expiry of that period, stand vacated.] On a plain reading of the provision it becomes apparent that where an order of stay is made in any proceeding relating to an appeal, the Tribunal is required to dispose of the appeal within a period of 180 days from the date of such an order granting stay of recovery and under the Second Proviso it is laid down that in case such appeal is not disposed of within the period specified in the First Proviso, on the expiry of the said period, the stay order shall stand vacated. The main provision states that the appellate Tribunal shall, where it is possible to do so hear and decide every appeal within a period of three years from the date of filing. 7. Thus, the scheme is that an appeal is required to be disposed of within a period of three years from the date of filing, but where stay is granted by the Tribunal, the said period of three years stands curtailed to 180 days from the date of the order granting stay. Though, the language employed by the statute appears to be mandatory in terms, considering the object behind the provision it has to be understood to mean as being directory in nature. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceptions carved out by the proviso necessary and the construction which would make the exceptions unnecessary and redundant should be avoided (See Principles of Statutory Interpretation by Justice G.P.Singh, Eighth Edition, 2001, pages 168, 169, 174, 175 and 176). 8. When legislature has provided in the main provision, i.e. sub-section (2A) of Section 35C of the Act, that CESTAT may hear and decide the appeal within a period of three years, where it is possible to so, legislature is well aware of the administrative exigencies and difficulties of the said body. There could be a host of reasons ranging from non-availability of a bench due to non-appointment of adequate number of technical and/or judicial members at a particular station to the quantum and quality of appeals at a particular station. One cannot and should not even attempt to exhaustively list these. Suffice it to state the discretion available to CESTAT under Section 35C (2A) of the Act does not stand obliterated by insertion of the two provisos, and more particularly by the Second Proviso. 9. The matter may be considered from a slightly different angle. Section 35C(1) of the Act empowers CESTAT to pass such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts judicial discretion. The period may be limited or could be co-terminous with disposal of appeal on consideration of all relevant factors in a given fact situation. 13. Therefore, as held by the Apex Court in case of Commissioner of Customs Central Excise, Ahmedabad Vs. M/s. Kumar Cotton Mills (P) Ltd. (supra) an assessee cannot be punished for matters which may be completely beyond the control of the assessee. The situations set out by the Apex Court in its order are only illustrative and not exhaustive. The object of the provision is expressed by the Apex Court to be for the purpose of curbing the dilatory tactics of assesses, who having obtained an interim order in their favour, seek to continue the interim order while delaying the disposal of the proceedings. The observations i.e. the last sentence on which reliance has been placed by the learned Senior Standing Counsel regarding latitude being given to the Tribunal are relatable only in the situation where extension of period of stay is sought. 5.06.2. Identical question came to be considered by Rajasthan High Court in the case of Chhote Lal Virendra Kumar Jain Versus Union of India Others, in Civil Writ Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.1.2014 served on the banker of the petitioner and the bank account of the petitioner which was debited through bank attachment on 22.1.2014 could not be held justified in the eye of law and we find substance in the submission made by the petitioner that after passing of the order by the Tribunal dt.23.1.2014 respondents remain under obligation to refund the money which was recovered from the petitioner by debiting the petitioner s account on 22.1.2014 and the very initiation of the proceedings deserves to be quashed in the eye of law in view of the order of tribunal dt. 23.1.2014. 16. Be that as it may, it is the settled principles of law and which is consistent and recognized that where a case is not considered because of multiplicity of business of the Court the party ought not to be prejudiced by that delay and when an act of the Court can prejudice no man, ditto would be for an omission in keeping with the aforesaid principles that if the matter has not been taken up for consideration on a given date at least the litigant cannot be left to suffer for such reason over which he has no control. The reason or cause for such eventuality could be many and usually as we have noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 254-2A, has held that the tribunal has no jurisdiction at all to continue the stay beyond the period of 365 days is concerned, it is required to be noted that as such before the Karnataka High Court the decision of the Hon ble Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd. was pressed into service. However, in the said decision, Karnataka High Court did not follow the decision of the Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd. (supra) by observing that interpretation of section 35C(2A) by the Hon ble Supreme Court in the decision of Kumar Cotton Mills Pvt. Ltd. would not be applicable while interpreting the provisions of section 254-2A of the Income Tax Act. With profound respect, we are not in agreement with the view taken by the Karnataka High Court. If para-materia and/or similar provision is interpreted by the Ho ble Supreme Court, the same is binding to the High Court and interpretation of para-materia provisions can be applied even with respect to other similar para-materia provisions in another statute. Under the circumstances, we are not in agreement with the view taken by the Karnataka High Court in the case of M/s.Ecom Grill Coffee Trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch no stay is granted. For that even the Appellate Tribunal and/or registrar of the Appellate Tribunal is required to maintain separate register of the appeals in which stay has been granted fully and/or partially and the appeals in which no stay has been granted. 5.08. Now, so far as second question which is posed for consideration of this Court is whether while disposing of the application for extension of stay granted earlier, the learned Appellate Tribunal is required to pass a speaking / reasoned order or not? As observed hereinabove, the learned Appellate Tribunal can extend the stay granted earlier beyond the period of 365 days from the date of grant of initial stay, however, on being subjectively satisfied by the learned Appellate Tribunal and on an application made by the assessee / appellant to extend stay and on being satisfied that the delay in disposing of the appeal within a period of 365 days from the date of grant of initial stay, is not attributable to the appellant / assessee and that the assessee is not at fault and therefore, while considering each application for extension of stay, the learned Appellate Tribunal is required to consider the facts of each case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 365 days from the date of grant of initial stay. However, as observed by the Hon ble Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd (supra), it should not be construed that any latitude is given to the Appellate Tribunal to extend the period of stay except on good cause and if the Appellate Tribunal is satisfied that the matter could not be heard and disposed of by reason of the fault of the Appellate Tribunal for the reasons not attributable to the assessee. It also may not be construed that the Appellate Tribunal can extend stay indefinitely. On expiry of every 180 days the concerned assessee / appellant is required to submit an appropriate application before the learned Appellate Tribunal to extend the stay granted earlier and the Appellate Tribunal may extend the stay for a further period but not beyond 180 days at a stretch and on arriving at the subjective satisfaction, as stated hereinabove, the Appellate Tribunal may extend the stay even beyond 365 days from the date of grant of initial stay and even thereafter. Meaning thereby after 180 days, the Appellate Tribunal is required to review the situation and consider the application for extension of stay appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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