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2015 (7) TMI 15 - GUJARAT HIGH COURT

2015 (7) TMI 15 - GUJARAT HIGH COURT - [2015] 376 ITR 23 (Guj) - Extension of stay of demand beyond the period of 365 days - revenue has challenged the impugned orders passed by the Tribunal extending stay of demand granted earlier beyond the period of 365 days and in the present case, for approximately 1000 days - Held that:- Applying the decision of the Division Bench of this Court in the case of Small Industries Development Bank of India (2014 (7) TMI 738 - GUJARAT HIGH COURT) to the facts of .....

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y 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. For that purpose, on expiry of every 180 days, the appellant / assessee is required to make an application to extend stay granted earlier and satisfy the learned Appellate Tribunal that the delay in not disposing of .....

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same time, it may not be construed that widest powers are given to the Appellate Tribunal to extend the stay indefinitely and that the Appellate Tribunal is not required to dispose of the appeals at the earliest. The object and purpose of section 35C(2A) of the Act particularly one of the object and purpose is to see that in a case where stay has been granted by the learned Appellate Tribunal, the learned Appellate Tribunal is required to dispose of the appeal within total period of 365 days, a .....

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ich stay has been granted fully and/or partially and the appeals in which no stay has been granted.

The learned Tribunal is also directed to see that the appeals of a particular assessee with respect same or similar issue involved in earlier years/with respect to respective years are clubbed together and heard and decided and dispose of together, may be with respect to a particular year, it is not a stay granted matter.

In the present case, it is reported that the appeal be .....

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ABLE MR.JUSTICE M.R. SHAH) Rule. Learned advocate Mr. Sandeep Singhi waives service of rule on behalf of the respondent No.1. 1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed to quash and set aside the impugned orders passed by the learned Income Tax Appellate Tribunal (for short learned Tribunal ) in Stay Application Nos.85 & 86/AHD/2011 in ITA Nos.386 & 387/ AHD/2011 for AY 2008-09 and 2009-10, by which the learned Tribunal has extend .....

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t in the respective appeals before the learned Tribunal, the assessee preferred stay applications. That out of total tax and the interest liability for AY 2008-09, out of ₹ 7,21,19,094/-, the assessee had already paid ₹ 6,37,50,000/- and a sum of ₹ 83,69,094/- was outstanding. Similarly, for AY 2009-10, out of total tax liability including interest of ₹ 9,04,43,478/-, the assessee had already paid ₹ 8,13,50,000/-. Thus, only a sum of ₹ 90,93,478/- was outstand .....

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anted by the learned Tribunal, more particularly, beyond the period of 365 days, the revenue has preferred present Special Civil Application under Article 226 of the Constitution of India. 3. Mrs. Bhatt, learned advocate appearing on behalf of the revenue has vehemently submitted that extension of stay of demand granted by the learned Tribunal beyond the period of 365 days in all is absolutely illegal and wholly without jurisdiction and contrary to section 254(2A) of the Income Tax Act (for shor .....

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ct, the order of stay beyond 365 days stands vacated even if the delay in disposing the appeal is not attributable to the assessee. It is submitted that therefore, in view of section 254(2A) of the Act, more particularly second proviso and third proviso to section 254(2A) of the Act, any extension of stay and/or granting of stay or demand beyond the period of 365 days is absolutely illegal, wholly without jurisdiction and contrary to section 254(2A) of the Act. 3.2 It is vehemently submitted by .....

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es grant of stay of demand during the pendency of the appeal before the learned Tribunal, in that case, the same shall always be subject to the provisions of the Act. It is submitted that once under law/Statute, it is provided that there cannot be any stay beyond the total period of 365 days, the same has to be respected by everybody including the learned Tribunal. 3.3 It is vehemently submitted by Mrs. Bhatt that legislative intent of restricting the period of stay of demand for a maximum perio .....

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stay, the learned Tribunal generally observes that the appeal to be listed at top of the board, such matters are ordinarily listed at the bottom of the board and no priority is given. 3.4 It is submitted by Mrs. Bhatt appearing on behalf of the revenue that in the present case, there is a huge tax liability pending since many years and the stay of demand granted by the learned Tribunal which has been extended from time to time and in the present case, for approximately 1000 days. It is submitte .....

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n. In support of her submission, Mrs. Bhatt, learned advocate appearing on behalf of the revenue has heavily relied upon the decision of the Division Bench of Delhi High Court in the case of Commissioner of Income Tax Vs. Maruti Suzuki (India) Limited decided on 2.1.2014 in Writ Petition (Civil) No.5086 of 2013 and in support of her prayer to allow the present petition and to quash and set aside the impugned orders passed by the learned Tribunal extending the stay of demand in respective appeals .....

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se of Commissioner of Customs and Central Exercise, Ahmedabad V. Kumar Cotton Mills Pvt. Ltd reported in (2005) 180 ELT 434(SC). Shri Soparkar has also heavily relied upon the decision of the Division Bench of this Court in case of Commissioner Vs. Small Industries Development Bank of India in Tax Appeal No.341 of 2014 and other allied tax appeals, in which the Division Bench had an occasion to consider the para materia provisions under the Central Excise Act, more particularly, section 35C(2A) .....

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disposing of the appeal by the learned Tribunal. 1. Shortage of Tribunal Members and many of the times, Bench is not functioning. Next hearing fixed almost after a month s time. 2. Many a times, the Bench sits one after another due to shortage of Members. As a result, no heavy stay granted matters can be taken up in either sitting. 3. In International tax cases, adjournments are being sought on account of non-availability of Assessing Officer to argue the case. 4. In transfer pricing cases, adjo .....

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paperbooks are being filed late by the Assessee/ Department (sometimes even on the day of hearing). 8. Assessee s Counsel taken adjournment on account of being not in town, being busy in some High Court matter, etc. 9. On many occasions, the Member who had heard the matter gets transferred and accordingly, the matters gets released for re-hearing which comes in the normal course. 10. Whenever Tribunal grants the stay order, it fixes the appeal/s for early hearing invariably. However when appeal .....

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only with Vice President of the Tribunal. Further even after the matters are clubbed, firstly appeal/s of earlier year/s have to be heard first. On some occasions efforts are made to hear the appeals together. However where earlier appeals involves many grounds (so also the stay granted appeal) it may not be feasible to do so. This requires that the earlier year/s appeal/s must be disposed off first and only thereafter stay granted appeal must be heard. In such a situation so long as earlier ye .....

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d Tribunal within a period of 180/365 days may not be attributed to the assessee, the assessee cannot be punished, more particularly when the initial stay has been granted after due application of mind by the learned Tribunal and after a strong case is made out by the assessee for grant of stay of demand. It is submitted that initially when the stay of demand has been granted by the learned Tribunal, the stay of demand is never granted mechanically. It is submitted that initial stay of demand is .....

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s and there is no delay in disposing of such appeals and all efforts are made by the learned Tribunal to decide and dispose of such appeals at the earliest looking to the legislative intent provided in section 254(2A) of the Act. 4.5 It is further submitted by Shri Soparkar, learned senior counsel that in the present case, the appeals were not decided and disposed of by the learned Tribunal as the issue involved in the appeals was pending before the Hon'ble Supreme Court. It is submitted tha .....

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nding the stay of demand for more than 365 days, by passing the impugned order. 5. Heard learned advocates appearing on behalf of the parties at length. 5.1 By way of this petition under Article 226 of the Constitution of India, the petitioner revenue has challenged the impugned orders passed by the learned Tribunal in respective stay applications in respective appeals extending stay of demand granted earlier beyond the period of 365 days and in the present case, for approximately 1000 days. It .....

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sub-section (2)] 4[or subsection (2A)] 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 subsection (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 suc .....

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ll not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed:] [Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period o .....

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ry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee. Therefore, as such, legislative intent seems to be very clear. However, the purpose and object of providing such time limit is required to be considered. The purpose and object of providing time limit as provided in section 254(2A) of the Act seems to be that after obtaining stay order, the assessee may not indulge into delay tactics and may not proceed further with the hearing of the .....

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o decide and dispose of the appeals within the maximum period of 365 days despite their best efforts. Some of the reasons due to which the learned Tribunal despite its best efforts is not in a position to dispose of the appeal/appeals at the earliest are stated herein above. There cannot be a legislative intent to punish a person/ assessee though there is no fault of the assessee and/or appellant. The purpose and object of section 254(2A) of the Act is stated herein above and more particularly w .....

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als are heard, decided and disposed of at the earliest and periodically the position/ situation is monitored by the learned Tribunal and the stay is not extended mechanically. 5.3.1 Identical question came to be considered by the Division Bench of this Court in the case of Small Industries Development Bank of India (supra) and while dealing with similar provisions under the Central Excise Act, 1944 more particularly section 35C(2A) of the Act, following substantial questions of law came to be co .....

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section 35C(2A) of the Central Excise Act, 1944? 5.4 After considering the rival submissions and considering various decisions of the other High Courts and this Court and even the decision of the Hon'ble Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd (supra), the Division Bench has observed as under: 5.04Therefore, in light of the above decision of the Hon ble Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd (supra), third proviso to section 35C(2A) which has come into effe .....

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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 noncooperation on the part of the assessee / app .....

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ould not have either intended to punish even those persons / assesses / appellants who are not at fault. In other words, the delay in not disposing of the appeal within 365 days is not attributable to them. Therefore, as such in view of the decision of Hon ble Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd., question No.1 is as such now not resintegra and the question No.1 is required to be answered in favour of the assessee and against the revenue, however, with some further observati .....

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her observed and held by the Division Bench that from insertion of section 35C(2A) of the Central Excise Act on statute book, it cannot infer a legislative intent to curtail/withdraw powers of the Appellate Tribunal to grant stay in appropriate cases and it is also not possible to infer any curtailment of such powers beyond the period of six months (180 days). Para 6 to 13 of the decisions of Division Bench in the case of Poly Fill Sacks (supra) reads as under : 6. Section 35C of the Act deals w .....

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days from the date of such order : Provided further that if such appeal is not disposed of within the period specified in the 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 Pr .....

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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 other words, disposal of appeal has to be within the specified period, three years or 180 days, where it is possible to do so. What meaning does one ascribe to the phrase where it i .....

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actment or to qualify something enacted therein which, but for the proviso, would be within the purview of the enactment. To this real nature of proviso is also another principle of interpretation that the proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception. Ordinarily, it is foreign to the proper function of proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment .....

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at, which is the proper view to take of it . Mudholkar, J. in Hindustan Ideal Insurance Co. Ltd. vs. Life Insurance Corporation Ltd. reported in AIR 1963 the Hon'ble Supreme Court 1087 stated the rule thus there is no doubt that where the main provision is clear, its effect cannot be cut down by the proviso. But where it is not clear, the proviso, which cannot be presumed to be a surplus age, can properly be looked into to ascertain the meaning and scope of the main provision. Since the natu .....

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ture 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 nonavailability 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 appeal .....

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T powers of the widest amplitude in dealing with appeals before it, grants by implication the power of doing all such acts, or employing such means, as are essentially necessary to its execution. The statutory power under the said section carries with it a duty in proper cases to make such orders for staying recovery of demand of duty, etc. pending an appeal before the Tribunal, as will prevent such an appeal, if successful, from being rendered nugatory. Sub-section (2A) of the Act was brought o .....

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the object of Tribunal dispensing justice in deserving cases where the assessee is not at fault in any manner : the assessee having filed appeal and stay application within period of limitation, prima facie proved his case at hearing and obtained stay with or without conditions, and cooperating with Tribunal for hearing and disposal of appeal : but, the Tribunal is not in a position to proceed for various reasons. 10. The contention on behalf of Revenue that the assessee must approach the Tribu .....

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d stay is adopting dilatory tactics, it is always open to Revenue to move the Tribunal in such an eventuality. 12. For the period subsequent to the insertion of the Second Proviso the Tribunal should, as a matter of practice, specify the time period during which the stay shall operate after exercising its 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 t .....

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our, 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 Pe .....

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ay have impact on the other pending matters. But, at the same time, the third proviso has been inserted in Sec.35C(2A) by the Finance Act, 2013 cannot be construed as punishing the assessees for matters which may be completely beyond their control and we can take judicial notice of pendency of appeals and workload assigned to the Tribunal and it is not possible for the Tribunal to dispose of the matters under the mandate of law. Occasionally, for the reasons of other administrative exigencies fo .....

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dt.30.10.2013 filed by the assessee seeking extension of stay order passed by the Tribunal dt.20.9.2012, was of the view that the appeal could not be disposed of for no fault of the petitioner assessee but in view of pendency of other old appeals and that was the reason which prevailed upon the Tribunal to extend operation of the stay granted dt.20.9.2012 during pendency of appeal vide its order dt.23.1.2014, in our considered view, after the stay order granted on 20.9.2012 has been allowed to c .....

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ed 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 .....

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no control. The reason or cause for such eventuality could be many and usually as we have noticed that because of heavy load of work but still litigant cannot be made to suffer for those reasons but keeping in view the mandate of law by introducing Sec.35C (2A) by Finance Act, 2002 and a third proviso added by Finance Act, 2013 In particular, it will be for the Tribunal to see that the matters must be decided within the period stipulated under the mandate of law, at the same time, where definit .....

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as under: 12. We are of the respectful view that the law as enunciated in Kumar Cotton Mills Pvt. Ltd. (supra) shouldalso apply to the construction of the third proviso as introduced in Section 254(2A) by the Finance Act, 2007. The power to grant stay or interim relief being inherent or incidental is not defeated by the provisos to the subsection. The third proviso has to be read as a limitation on the power of the Tribunal to continue interim relief in case where the hearing of the Appeal has b .....

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Tribunal to extend the period of stay on good cause being shown and on the Tribunal being satisfied that the matter could not be heard and disposed of for reasons not attributable to the assessee. 5.07. The result of the aforesaid discussion would be that by section 35C(2A) of the Central Excise Act it cannot be inferred a legislative intent to curtain / withdraw power of the Appellate Tribunal to extend stay beyond the total period of 365 days. However, the aforesaid extension of stay beyond th .....

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application to extend stay granted earlier and satisfy the learned Appellate Tribunal that the delay in not disposing of the appeal is not attributable to him / it and the learned Appellate Tribunal is required to review the matter after every 180 days and while disposing of such application of extension of stay, the learned Appellate Tribunal is required to pass a speaking order with respect to itsown satisfaction that the assessee / appellant is not indulged into any delay tactics and that th .....

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ppellate Tribunal, the learned Appellate Tribunal is required to dispose of the appeal within total period of 365 days, as ultimately revenue has not to suffer and all efforts shall be made by the learned Appellate Tribunal to dispose of such appeals in which stay has been granted as far as possible within total period of 365 days from the date of grant of initial stay and the Appellate Tribunal shall grant priority to such appeals over appeals in which no stay is granted. For that even the Appe .....

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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 faul .....

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r not and/or whether there is any delay tactics by such appellant / assessee in whose favour stay has been granted and/or whether such appellant is trying to get any undue advantage of stay in his favour or not. Therefore, while passing such order of extension of stay, learned Appellate Tribunal is required to pass a speaking order on each application and after giving an opportunity to the representative of the revenue - Department and record its satisfaction as stated hereinabove. Therefore, ul .....

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it is held that in case and having satisfied that delay in not disposing of the appeal within 365 days (total) from the date of grant of initial stay is not attributable to the appellant / assessee in whose favour stay has been granted and that the Appellate Tribunal is satisfied that such appellant / assessee has fully cooperated in early disposal of the appeal and/or has not indulged into any delay tactics and/or has not taken any undue advantage, the learned Appellate Tribunal may, by passin .....

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te 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 her .....

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pass a speaking order, as stated hereinabove. By the aforesaid it may also not be understood that the Appellate Tribunal may go on extending the stay indefinitely and may not dispose of the appeals within stipulated time i.e. within 365 days from the date of grant of initial stay and/or at the earliest. All efforts shall be made by the learned Appellate Tribunal to dispose of the appeals at the earliest more particularly in a case where stay is operative against the revenue. The learned Appella .....

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r not, for the reasons stated above, the said question is answered in favour of the revenue -department and against the assessee. Consequently, all the matters are remanded to the learned Appellate Tribunal to pass appropriate order afresh and pass speaking and reasoned order in light of the observations made hereinabove. Such exercise shall be completed within a period of two months from today. So as to see that the applications of the respective appellants / assesses for extension of stay do n .....

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of the Tribunal under section 254(2A) of the Act, it is observed and held that by section 254(2A) of the Act, it cannot be inferred a legislative intent to curtail/withdraw powers of the Appellate Tribunal to extend stay of demand beyond the period of 365 days. However, the aforesaid extension of stay beyond the period of total 365 days from the date of grant of initial stay would always be subject to the subjective satisfaction by the learned Appellate Tribunal and on an application made by th .....

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ate Tribunal is required to review the matter after every 180 days and while disposing of such application of extension of stay, the learned Appellate Tribunal is required to pass a speaking order after having satisfied that the assessee / appellant has not indulged into any delay tactics and that the delay in disposing of the appeal within stipulated time is not attributable to the assessee / appellant. However, at the same time, it may not be construed that widest powers are given to the Appel .....

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learned Appellate Tribunal to dispose of such appeals in which stay has been granted as far as possible within total period of 365 days from the date of grant of initial stay and the Appellate Tribunal shall grant priority to such appeals over appeals in which 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 .....

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s are clubbed together and decided and disposed of together, as it is reported that the powers of clubbing of the matters are only with the Vice President of the Tribunal. Registry also may insist that the paper books are filed by the assessee/ department as early as possible and preferably within a period of three months from filing of the appeals so as to see that the purpose and object of section 254(2A) of the Act is achieved i.e. appeals in which the stay of demand has been granted by the l .....

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n for extension of stay granted earlier, the learned 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 p .....

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ssessee or not and/or whether the assessee / appellant in whose favour stay has been granted, has cooperated in early disposal of the appeal or not and/or whether there is any delay tactics by such appellant / assessee in whose favour stay has been granted and/or whether such appellant is trying to get any undue advantage of stay in his favour or not. Therefore, while passing such order of extension of stay, learned Appellate Tribunal is required to pass a speaking order on each application and .....

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t. 6.0 Now, so far as the reliance placed upon decision in the case of Maruti Suzuki (India) Limited (supra) by learned advocate appearing on behalf of the revenue is concerned, it is required to be noted that while disposing of the writ petition, the Delhi High Court has observed that in respect of section 254(2A) of the Act, the High Court has power under Article 226 of the Constitution of India to grant and extend stay where the appeal is pending before the Tribunal. However, the learned Trib .....

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tay. (ii) 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 that the third proviso to Section 254(2A) would come into operation. (iii) Third proviso to Section 254(2A) does not bar or prohibit the Revenue or departmental representative from making a statement that they would not take coercive steps to recover the impugned demand and on such statement being made, it will be open to the .....

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