TMI Blog2014 (2) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Appellate Tribunal [2010 (4) TMI 747 - Bombay High Court ] - Grant of stay by the tribunal is not a matter of right, but is decided by a speaking order, recording prima facie view on merits - In case there is an error or the tribunal has erred in granting stay, Revenue is not without remedy and can approach the High Court in accordance with law – the Revenue is the appellant before the High Court in disproportionately large percentage of cases, being aggrieved by the finding/adjudication by the tribunal on the question of law and fact - Appeals are preferred by the Revenue mostly in cases where the tax demand is ₹ 10 lakhs or above - The figures/data does indicate that in substantial number of matters, Revenue may not have succeeded before the tribunal in sustaining the tax demand. In view of the third proviso to Section 254(2A) of the Act substituted by Finance Act, 2008 with effect from 1st October, 2008, tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay - In case default and delay is due to lapse on the part of the Revenue, the tribunal is at liberty to conclude hearing and decide the appeal, if there is likelihood t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or subsection (2) of section 253 : Provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period of stay specified in that order: Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r:- It appears to me on principle that the Court ought to possess that jurisdiction, because the principle which underlies all orders for the preservation of property pending litigation is this, that the successful party in the litigation, that is, the ultimately successful party, is to reap the fruits of that litigation, and not obtain merely a barren success. That principle, as it appears to me, applies as much to the Court of first instance before the first trial, and to the Court of appeal before the second trial, as to the Court of last instance before the hearing of the final appeal. 5. The aforesaid incidental powers are subject to and can be circumscribed by the statute. Tribunals have statutory power under Rule 35A of the Appellate Tribunals Rules 1963 to grant stay of demand. Section 254(2A) was inserted by Finance Act, 1999 w.e.f. 1st June, 1999, at the time of insertion it was as under:- (2A) In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) of section 253. 6. Provisos were interested by Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent of the Parliament was not to denude the tribunal of its incidental power to continue the interim reliefs and the mischief which the amendment sought to curtail was long delay and disposal of the proceedings where interim relief was obtained by the assessee. The second proviso read in a reasonable manner was to avoid and check this mischief and not an arbitrary mandate to deny an assessee continuation of interim relief beyond 180 days, when he was not at fault. Amendment of 2007 had extended the period of interim relief to 365 days with the intent that the tribunal should take note of the delay and it was not with the objective to defeat the rights of the assessee when the appeal could not be disposed of even when there was no omission or failure on the assessee s part but either for failure of the tribunal or acts of the Revenue. 8. Revenue did prefer an appeal against the said judgment but the same was disposed of as infructuous, leaving the question of law open. However, we find that the ratio of the said decision was acceptable and in accordance with law, as identical and pari materia provision of the CE Act was examined by the Supreme Court in Commissioner of Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doctrine of reading down, the High Court has held that the circular in question, which stipulated that the demand if not stayed by the tribunal within 30 days would be recovered, should be struck down. It was observed:- 52. The assessee having preferred appeal and that Tribunal being satisfied that condition for dispensing with the pre-deposit of duty demanded and penalty levied is made out, is compelled to pay the duty demanded and penalty levied, if the appeal is not decided within 180 days. The assessee has no control in respect of matters pending before the Tribunal; in the matter of availability of infrastructure; the members of the Tribunal and the workload. Therefore, for the reason that the Tribunal is not able to decide appeal within 180 days, the vacation of stay is a harsh and onerous and unreasonable condition. The condition of vacation of stay for the inability of the Tribunal to decide the appeal is burdening the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum is sought to be annulled for no fault of assessee. Therefore, in terms of judgments in Anant Mills Ltd. and Seth Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ault or even when faults or delay are directly attributable to the Revenue. There could be faults and delay because the Bench of the tribunal may not be able to hear the appeal or the upper time limit specified comes to an end even when the judgment is reserved or judgment of the High Court or of special Bench is awaited. 13. Indeed there can be numerous reasons and causes why appeals, after grant of stay, may not get finally decided within 365 days. There is also merit in the contention of the counsel for the assessees that when an assessee is at fault and delay is attributable to him, invariably a stay granted is vacated or should be vacated by the tribunal. Stay is granted or extended only when prima facie case is made out and the assessee does not delay the proceedings. The provisions are clear that the tribunal can vacate or modify the stay order; if not, the Constitutional Courts can be moved. 14. Keeping these aspects in mind, in ITA No. 67/2013 relating to HCL Technologies Limited on 15th July, 2013, the following order was passed:- Learned counsel for the appellant has been asked to answer what the tribunal should do, when departmental representative pray for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e standing counsel for Revenue accepts and admits that in spite of Section 254(2A), the High Court has power to grant and extend stay where the appeal is pending before the tribunal. The constitutional power and right is available and has not and cannot be curtailed. The powers of the High Court under Articles 226 and 227 form a part and parcel of the basic structure of the Constitution and cannot be over written and nullified as held by the Constitutional Bench in L. Chandra Kumar versus Union of India, (1997) 3 SCC 261. Thus, the High Court in appropriate matters can grant or extend stay even when the tribunal has not been able to dispose of an appeal within 365 days from the date of grant of initial stay. This perhaps appears to be and apparently is the intention of the Parliament. High Court while granting or rejecting the writ petition will examine the factual matrix, record reasons as to who is to be blamed and is responsible for the default and can also issue appropriate directions or orders for expeditious and early disposal of the appeal. The provision will propel and ensure that the tribunal will try and dispose of and decide appeals within 365 days of the grant of stay o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tribunal vide order dated 8th February, 2013 for another period of 4 months. Similarly, in the case of Bose Corporation India Private Limited stay was granted for the first time on 9th December, 2011 for a period of 6 months, second time on 15th June, 2012 for a period of 180 days and third time on 4th January, 2013 for a period of 6 months. In spite of objections of the Revenue, for the fourth time stay was granted on 12th July, 2013 for another period of 180 days. 20. In light of the said submissions, while reserving the judgment on 7th November, 2013, we had asked Mr. Rajeeve Mehra, Additional Solicitor General of India to furnish information/details from the tribunal. The relevant portion of the order dated 7th November, 2013 reads as under:- We feel it appropriate and proper to get data from the Tribunal for last three years with regard to: a) Number of appeals filed before the Tribunal by the assessee and the revenue; b) Average time taken for disposal of an appeal before the Tribunal; c) Number of cases in which the stay orders were passed and average time of disposal of an appeal where stay order was passed; d) Number of cases/appeals where stay orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of appeals, which were not disposed of within 365 days of grant of stay, have come down sharply in the year 2013. Grant of stay by the tribunal is not a matter of right, but is decided by a speaking order, recording prima facie view on merits. In case there is an error or the tribunal has erred in granting stay, Revenue is not without remedy and can approach the High Court in accordance with law. 23. We do not have figures or data on whether the demands raised, which was subject matter of stay, was sustained/upheld or were deleted by the tribunal. Merits and justification of additions is examined by the appellate forums and demands raised have relevance when they are sustained by the tribunal/High Court and the Supreme Court. 24. Registry of this Court has made available to us following data:- A B C D E Year TOTAL NUMBER OF INCOME TAX APPEALS APPEALS FILED BYCIT APPEALS FILED BY ASSESSEE % OF APPEALS FILED BY ASSESSEE 2009 1367 1128 239 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. We would now like to deal with the individual facts relating to each writ petition, though some facts have been stated in paragraph 19, above. W.P.(C) 5003/2013 (CIT versus ITAT Base Corpn. India Pvt. Ltd.) 29. Appeal filed by the respondent-assessee relates to assessment year 2007-08 and was filed in the year 2011. Stay of the impugned demand was granted by order dated 9th December, 2011 and was extended by order dated 15th June, 2012. The question relates to determination of arms length pricing on international transactions and the tax amount involved is Rs.4,63,35,706/- which includes interest of Rs.96 lakhs under Section 234B of the Act. By the impugned order dated 4th January, 2013, stay was extended by 180 days or till the disposal of the appeal, whichever occurs first. The impugned order records that after 15th June, 2012, the appeal was listed thrice for hearing on 3rd July, 2012, 13th August, 2012 and 8th November, 2012, but adjournments were taken by the departmental representative. Earlier also on 16th February, 2012, the departmental representative had taken an adjournment. However, the assessee had taken adjournment on 11th April, 2012 on the ground of cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2012 01.08.2012 Adjourned on request of both parties 8 01.08.2012 02.08.2012 Adjourned 9 02.08.2012 23.08.2012 Assessee s argument. Part Heard 10 23.08.2012 03.09.2012 Adjourned on request of both parties 11 03.09.2012 05.09.2012 Adjourned on request of both parties 12 05.09.2012 15.10.2012 Adjourned on request of both parties 13 15.10.2012 01.11.2012 Adjourned on request of both parties 14 01.11.2012 08.11.2012 Both counsel s busy in special Bench Adjourned on request of both parties 15 08.11.2012 21.11.2012 Adjourned on request of both parties 16 21.11.2012 To be listed in regular course 17 03.01.2013 30.01.2013 Adjourned on request of DR 18 30.01.2013 11.03.2013 12.03.2013 Adjourned due to paucity of time by bench 19 11.03.2013 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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