STAY NOT GETS VACATED AFTER 180 DAYS WHEN TRIBUNAL FAILED TO HEAR OR DUE TO ACTS OF THE DEPARTMENT

[Mr. M. GOVINDARAJAN]

      In any litigation at any stage obtaining stay order is possible. Such stay order is granted by the Court/tribunal for some days. It is the duty of the concerned party to extend the stay otherwise the stay granted will be automatically vacated. Section 129 B (2A) of Customs Act, 1962 provides 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 on which appeal is filed. It first proviso to Section 129 (2A) provides that where an order stay is made in any proceeding relating to an appeal filed under sub-section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order.  The second proviso to Section 129 (2A) provides that if such appeal is not disposed of within one hundred and eighty days, the stay order shall on the expiry of that period stand vacated.

     If the appeal is not disposed of within one hundred and eight days which is beyond the control of the assessee what would be the consequence. Whether the assessee is to go to the tribunal and ask for extension of stay order? For getting answer to this question we may discuss some of the decided case laws.

     In 'Nedumparambil P. George V. Union of India' - 2009 -TMI - 75102 - (BOMBAY HIGH COURT)  the tribunal passed an order on 03.01.2007 waiving pre deposit of penalty and also stayed recovery till the disposal of the appeal. The Department  by orders directed recovery of the amounts on the contention that the stay order is automatically vacated by the operation of law if the appeal filed under section 35B (1) is not disposed of within one hundred and eighty days from the date of passing the order by the Tribunal.      

     The assessee aggrieved against this filed the writ petition before the High Court.  The High Court after hearing both sides found that there is no record to show that the appeal could not be heard on account of any act of the assessee herein. The tribunal itself,  in spite of the fact that section 129 B (2A) was on the statute book, granted stay pending the hearing and final disposal of the appeal. The appeal was filed in the year 2006. Considering the date of filing of the appeal and the first proviso to Section 129 B (2A) the tribunal was duty bound to dispose of the appeal within one hundred and eighty days in a case where stay is granted. In this case the tribunal has not disposed of the appeal within one hundred and eighty days. When the tribunal granted stay order that by it would indicate that the tribunal itself was conscious of the fact that it is not in a position to hear and dispose of the appeal within one hundred and eighty days.  It is in that context that the second proviso must be considered.

     The High Court relied on the decision of Supreme Court in 'Commissioner of Customs and Central Excise, Ahamedabad V. Kumar Cotton Mills P. Ltd.,' 2005 -TMI - 47203 - (SUPREME COURT OF INDIA), wherein in respect of similar provision under the Central Excise Act, this is what the Supreme Court observed-

"The sub-section which was introduced in terrorem cannot be construed as punishing the assessee for matters which may be completely beyond their control. For example many of the tribunals are not constituted and it is not possible for such tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay applications are not disposed within the time specified. The reasoning of the Tribunal expressed in the impugned order and as expressed in the Larger bench matter, namely 'IPCL V. Commissioner of Central Excise' cannot be faulted. However, we should not be understood as holding that any latitude is given to the tribunal to extend the period of stay except on good cause and only if the Tribunal is satisfied the matter could not be heard and disposed of by reason of the fault of the Tribunal for reasons not attributable to the assessee".

     The Bombay High Court, relying on the above said judgment, in the case of 'Narang Overseas P. Limited V. Income Tax Appellate Tribunal and others' - [2007 -TMI - 1644 - HIGH COURT, BOMBAY] in respect of similar provision under the Income Tax Act had applied the said ratio and observed that the power to grant interim relief is inherent and inheres in a tribunal vested with the power to finally hear an appeal. A provision like the second proviso  must be read to mean that such a power not to continue a stay beyond one hundred and eight days, is in those circumstances where the failure is on account of the acts of the appellant. The appeal here could not be disposed of within one hundred and eight days. The said proviso, the Court held, cannot be read to defeat the vested right of appeal of an appellant when the appellant is not at fault. In the opinion of the Court where the appellant is not at fault and the failure is on account of the tribunal to hear the appeal for whatever reason or on account of the acts of the respondent, the law as explained in the judgment in 'Narang Overseas P Ltd.,' [2007 -TMI - 1644 - HIGH COURT, BOMBAY] will have to be applied also under the provisions of the Customs Act.

     In this case the department submitted that the court should direct to go to the tribunal and ask for extension of stay. The second proviso literally read has the effect of vacating the stay on expiry of one hundred and eighty days. Therefore there is no power of extension conferred on the tribunal if the proviso is so read.  The proper way to read the second proviso would be, that the tribunal itself at the hearing of the stay application considering its docket and or the Benches available grants stay till the hearing and final disposal of the appeal. 

     Once the tribunal grants stay, in the absence of either the appellant or respondent applying for adjournments without justifiable cause with a view to delay the hearing, the Tribunal considering the duty on it is bound to hear and dispose of the appeal within one hundred and eighty days. If it has granted stay and does not hear the appeal within one hundred and eighty days then, there is no reason why the stay should not continue till such time the appeal is heard and disposed of in the absence of any failure on part of the appellant. The Court held that on the facts of this case, as nothing has been brought to the attention of the Court that it was on account of the acts of the petitioner that the appeal could not be heard, the relief sought for by the petitioner will have to be allowed.