TMI Blog2013 (2) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... d to initiate recoveries against an assessee who has filed an appeal together with an application for stay merely because the application has remained pending on the file of the decision making authority would be to penalize the assessee for a situation over which the assessee has no control. This would be patently arbitrary and violative of Article 14 of the Constitution. Revenue's submission that during the course of the hearing the field officers of the Revenue who initiate recovery action are independent of the adjudicating or appellate forum and hence have no means of verifying the status of the applications for stay and it is hence for the assessee, when recovery action is initiated to inform the jurisdictional Commissioner of the pendency of the stay application cannot be treated as a valid justification for penalizing an assessee whose conduct is otherwise free from blame. Thus the provisions contained in the impugned circular dated 1 January 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to an assessee who has filed an application for stay, which has remained pending for reasons b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in certain cases immediately. According to the Petitioners when the stay application remains to be disposed of due to the inability of the appellate authority to take up the application for hearing and for disposal, and without any default on the part of the assessee, it would be arbitrary to penalize the assessee by enforcing the recovery despite the pendency of the application for stay. For convenience of reference, the facts of the lead petition in the group are being enunciated. 3. The Petitioners, Larsen and Toubro Limited are engaged in providing services of commission agents in India and Nepal for all kinds of earth moving equipment and other machines including accessories and spares manufactured by L T Komatsu Limited. Two notices to show cause were issued to the Petitioners on 24 March 2005 and 24 October 2005 for the non-payment of service tax dues. The Petitioners filed their replies. By an order dated 10 October 2011 the Commissioner of Central Excise, Thane-I confirmed a demand on account of service tax for the period between April 2003 and March 2005, holding that the service provided by the Petitioners fell under the category of clearing and forwarding agent serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with recovery proceedings after waiting for a decision on the stay application for a reasonable period, which would depend upon the facts and circumstances of a particular case. The Board accepted the advice of the law ministry noting that the mere pendency of a stay application was not a legal bar to proceed with recovery in the absence of a specific order. By a circular dated 2 March 1990 the Board reiterated that it was hardly fair and just to proceed with the recovery proceedings while application for stay of the impugned order or for waiver of the condition of pre-deposit was pending before the Appellate Authorities , this being based on the ratio of certain judgments delivered by this Court. By a subsequent circular dated 21 December 1990 the Board stated that the correct legal position is that unless an assessee obtains a stay, the Department is within its right to recover the duty confirmed in an order. But as a practical step and for administrative convenience a period of three months, it was stated, can be granted before taking coercive steps for the recovery of dues (one month for filing an appeal and stay application and two more months for obtaining orders on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recovery to be initiated after expiry of statutory period of 60 days for filing appeal. 2 Commissioner (Appeals) Appeal filed without stay application against a confirmatory order-in- original. Recovery to be initiated after such an appeal has been filed, without waiting for the statutory 60 days period to be exhausted. 3 Commissioner (Appeals) Appeal filed with a stay application against an order-in-original. Recovery to be initiated 30 days after the filing of appeal, if no stay is granted or after the disposal of stay petition in accordance with the conditions of stay, if any specified, whichever is earlier. 4 NIL No appeal filed against an Order-in-Original issued by the Commissioner. Recovery to be initiated after expiry of statutory period of 90 days for filing appeal from the date of communication of order. 5 CESTAT Appeal filed without stay application against an Order-in-Original issued by the Commissioner. Recovery to be initiated on filing of such an appeal, without waiting for the statutory 90 days period to be exhausted. 6 CESTAT Appeal fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hear and decide every appeal within a period of six months from the date on which it is filed. Section 35B governs appeals to the Tribunal and sub section (3) requires every such appeal to be filed within a period of three months from the date on which the order sought to be appealed is communicated to the party preferring the appeal. Sub section (4) allows cross-objections to be filed within a period of forty-five days of the receipt of a notice that an appeal has been preferred. Rule 15A of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules 1982 allows a period of one month to file a reply to an appeal. Sub section (5) of Section 35B empowers the Appellate Tribunal to condone the delay in filing an appeal or cross-objections for sufficient cause. Under sub section (2A) of Section 35C the Tribunal is required, where it is possible to do so, to hear and decide the appeals within three years from the date on which the appeal is filed. The first proviso requires the Tribunal, where an order of stay has been passed to dispose of the appeal within 180 days from the date of such order. The second proviso stipulates that where the appeal is not disposed of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal is filed without an application for stay. Sr. Nos.7 and 8 deal with a situation where a demand is confirmed for the first time by the Commissioner (Appeals) but either no appeal is filed against the order of the Commissioner (Appeals) or an application for stay is not filed with the appeal. In those situations, the Board has directed that recovery should be initiated after the expiry of the statutory period of ninety days for the filing of an appeal, despite which no appeal has been filed or on the filing of the appeal before the CESTAT where no stay application has been filed. 10. The real dispute in the present batch of cases relates to the instructions which have been issued in Sr. Nos.3, 6, 9, 10 and 11 of the table appended to the circular dated 1 January 2013. Sr. Nos., 3, 6 and 9 all deal with situations where appeals are filed together with an application for stay. Sr. No.3 deals with an appeal to the Commissioner (Appeals), Sr. No.6 with an appeal to the CESTAT against an original order of the Commissioner and Sr. No.9 with an appeal before the CESTAT against an order of the Appellate Authority confirming a demand for the first time. The Board has now mandated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal may not be able to dispose of the appeal within a period of 180 days may have no bearing on the conduct of the assessee, but on the availability of sufficient judicial and administrative infrastructure for the disposal of appeals. Undoubtedly, in a given case the failure of a judicial body to dispose of the appeal expeditiously may be the consequence of dilatory tactics by the assessee, but that is not necessarily so. This issue was dealt with by the Supreme Court in a judgment in Commissioner of Customs and Central Excise, Ahmedabad v. Kumar Cotton Mills Pvt. Ltd. - 2005 (180) E.L.T. 434 (S.C.). The Supreme Court noted that sub section (2A) of Section 35C was a provision which has been made by Parliament to curb dilatory tactics of those assesses who, having got an interim order in their favour, seek to continue their operation by delaying the disposal of the proceedings, thus, depriving the revenue not only of the benefit of the assessed value, but of a decision on points which may have an impact on other cases. At the same time, the Supreme Court emphasized that the provision cannot be interpreted to punish an assessee whose appeal has not been disposed of wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the delay in the disposal of an appeal by an assessee or for that matter the delay in the disposal of a stay application may take place for reasons which lie outside the control of the assessee. Where the failure of the Appellate Authority to dispose of the appeal or the application for stay arises without any default on the part of the assessee, and without the assessee having resorted to any dilatory tactics, there would, in our view, be no reason or justification to penalize the assessee by recovering the demand in the meantime. Undoubtedly, where the assessee has been responsible for the delay in the disposal of the stay application, such an assessee cannot be heard to complain if the Revenue were to initiate steps for recovery. But the vice of the circular of the Board dated 1 January 2013 is that it mandates that steps for recovery must be initiated thirty days after the filing of the appeal if no stay is granted. Counsel appearing on behalf of the Revenue submits that the Board has directed that a period of thirty days should be allowed to lapse after the filing of the appeal, allowing the assessee time to move the Appellate Authority for the disposal of the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal and for applying for a waiver of pre-deposit. Similarly, Sr. No.11 stipulates that where the Tribunal has confirmed the demand, a recovery would be initiated immediately on the issuance of the order of the Tribunal. The assessee is therefore deprived of even a reasonable period of time to move the High Court against the order of the Tribunal. In our view, the circular which is issued by the Board is in terrorem and its plain effect and consequence is to deprive the assessee of the remedy which is provided under the law of moving, as the case may be, the CESTAT, the High Court or the Supreme Court against an order of adjudication of the competent appellate forum. Initiating recovery proceedings because a stay application has not been disposed of within thirty days of the filing of an appeal would be to penalize an assessee for the inability of the judicial or, as the case may be, quasi-judicial authority to conclude the disposal of the stay application within that period. If the assessee is not responsible for the delay in the disposal of the stay application and the application remains pending for reasons not attributable to the conduct of the assessee, initiation of recovery p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stay. The difficulty in accepting the defence which is submitted in the reply is that the Appellate Authorities, whether it be the Commissioner (Appeals) or the CESTAT are empowered to waive the requirement of a pre-deposit. An assessee who moves an application for waiver and is diligent in pursuing the application cannot be blamed for the inability of the appellate forum to dispose of the stay application. The reasons such as the absence of adequate infrastructure which lead to an accumulation of a backlog or the unavailability of the appellate officer or a duly constituted Bench of the Tribunal are matters which lie beyond the volition of an assessee. If at all, these are matters over which the executive arm of the State has control. Hence, to blame an assessee who is not in default and to initiate recoveries against an assessee who has filed an appeal together with an application for stay merely because the application has remained pending on the file of the decision making authority would be to penalize the assessee for a situation over which the assessee has no control. This would be patently arbitrary and violative of Article 14 of the Constitution. 16. Counsel appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the Tribunal. But equally significant is the need to protect the interest of the Revenue which the adoption of electronic technology would also achieve. We are not unmindful of the fact that an application for stay may be kept pending for an indefinitely long period of time at the behest of an unscrupulous assessee and a willing administrative or quasi-judicial authority. This would be obviated by incorporating the requirement of disseminating and uploading the proceedings of judicial and quasi-judicial authorities under the Central Excise Act 1944 as well as the Customs Act 1962 in an electronic form. This would ensure that a measure of administrative control can be retained with a view to safeguarding the position of the Revenue as well as in ensuring fairness to the assessees. We hope and trust that this suggestion of the Court will receive serious and urgent consideration by the Union Ministry of Finance. 17. For these reasons, we have come to the conclusion that the provisions contained in the impugned circular dated 1 January 2013 mandating the initiation of recovery proceedings thirty days after the filing of an appeal, if no stay is granted, cannot be applied to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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