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Commissioner of Central Excise, Delhi Versus Brew Force Machine Pvt. Ltd.

2015 (8) TMI 696 - DELHI HIGH COURT (FB)

Power of Tribunal to extend stay beyond the period of 365 days - Application of Maruti Suzuki (India) Ltd. [2014 (2) TMI 1037 - DELHI HIGH COURT] delivered in case of Income tax on Section 35C(2A) of Central Excise - Held that:- legislature had by Finance Act, 2008 inserted the words 'even if the delay in disposing of the appeal is not attributable to the assessee' in the third proviso to Section 254 (2A) of the IT Act, but no such amendment or substitution was made in Section 35C (2A) of the CE .....

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al validity of Section 254(2A) was not considered in Maruti Suzuki (India) Ltd. [2014 (2) TMI 1037 - DELHI HIGH COURT] - This court has struck down the provisions of Section 254(2A) on ground of constitutional validity in the case of PEPSI FOODS PVT. LTD [2015 (5) TMI 655 - DELHI HIGH COURT]. - Means thereby, the tribunal has power to grant extension of stay order.

Therefore, we are unable to agree with the reasoning of the Division Bench of this Court in Haldiram India Pvt. Ltd. [201 .....

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referred to this Full Bench pertains to power of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to grant or extend stay of recovery of demand beyond 365 days from the date when the stay order was initially passed, notwithstanding that the delay in disposal of the appeal was not attributable to an assessee. 2. In CEAC 18/2015, Commissioner of Central Excise, Delhi Vs. Haldiram India Pvt. Ltd. decided on 5th May, 2015, a Division Bench of this Court reversed the decision of a larg .....

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nch of this Court while hearing arguments in CEAC 27/2015, Commissioner of Central Excise, Delhi Vs. Brew Force Machine Pvt. Ltd., prima facie, felt that the observations in Haldiram India Pvt. Ltd. (supra) may not be correct and appropriate as Section 35C of the Central Excise Act, 1944 (CE Act) is not identically worded and pari materia to the third proviso to Section 254(2A) of the IT Act, as substituted by Finance Act, 2008 with effect from 1st October, 2008. The amendments/substitution by t .....

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ay beyond 365 days, when the appellant-assessee is not at fault. 4. In order to appreciate the controversy, we would like to reproduce Section 35C (2A) of the CE Act and Section 254 (2A) of the IT Act, which read as under:- "35C (2A) 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 such appeal is filed: Provided that where an order of stay is made in any proceeding relating to an appeal filed unde .....

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ehalf by a respondent and on being satisfied that the delay in disposing of the appeal is not attributable to such respondent, extend the period of stay to such further period, as it thinks fit, not exceeding one hundred and eighty-five days, and in case the appeal is not so disposed of within the total period of three hundred and sixty-five days from the date of order referred to in the first proviso, the stay order shall, on the expiry of the said period, stand vacated." x x x x "254 .....

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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, .....

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iso 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 or periods, even if the delay in disposing of the appeal is not attributable to the assessee." (emphasis supplied) 5. The difference in the language of the third proviso is apparent and striking. The words "even if the delay in disposing of the appeal is not attributable t .....

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authorities and decisions of the Tribunal in which it was held that the Income Tax Appellate Tribunal in terms of earlier third proviso i.e. before the Finance Act, 2008, had the power and jurisdiction to grant stay beyond the period of 365 days from the date when stay was first granted if the assessee was not at fault. Taking notice of the amendment and substitution made by inserting the expression "even if the delay in disposing of appeal is not attributable to the assessee" it has .....

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as a legislative edict. The third proviso after amendment, undoubtedly bars and prohibits the tribunal from extending interim stay order beyond 365 days. It stipulates deemed vacation and imposes no fault consequences in strict terms. The language is clear and therefore has to be respected. However, the provision does not bar or prohibit an assessee from approaching the High Court by way of writ petition for continuation, extension or grant of stay. Fairly, the standing counsel for Revenue accep .....

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e 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 ea .....

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as challenged It was observed that the proviso enacted a stringent provision as a result of which even if the delay in disposing of the appeal was/is not attributable to the assessee, the stay stands vacated after 365 days. Thus, the tribunal was/is under binding duty and obligation to dispose of the appeal within the said time, particularly when the fault was not on the part of the assessee. In the said case, directions were issued for expeditious disposal of the appeal and it was also directed .....

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such period or periods." Referring to the statutory provisions as they existed prior to substitution of third proviso by Finance Act, 2008, in Maruti Suzuki (India) Ltd. (supra), it has been observed:- "7. The effect of the added provisos as they then existed was considered by the Bombay High Court in Narang Overseas P. Ltd.v. ITAT and others (2007) 295 ITR 22 (Bom) and it was held that the provisos and the Section did not exclude or negate the power of the tribunal to grant relief af .....

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lt. 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 .....

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curbing the dilatory tactics of those assesses who, having got an interim order in their favour, seek to continue the interim order by delaying the disposal of the proceedings. Thus, depriving the revenue not only of the benefit of the assessed value but also a decision on points which may have impact on other pending matters. Xxxxx 6. The sub-section which was introduced in terrorem cannot be construed as punishing the assesses for matters which may be completed beyond their control. For examp .....

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d 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 that the matter could not be heard and disposed of by reason of the fault of the Tribunal for reasons not attributable to the assessee." 9. We are aware that the Karnataka High Court in CIT vs. Ecom Gill Coffee Trading (P) Ltd. [2012] 252 CTR 281 (Kar.) has dissented from the view taken by Bombay High Court in Narang Overseas Pvt. Ltd. (supra). Howe .....

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ovisions of Section 35(2A) of the CE Act. In the said decision after extensively referring to the case law on the subject and applying the 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 d .....

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ation 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 Nandlal cases (supra), such condition of automatic vacation of stay on the expiry of 180 days, has to be read down to mean that after 180 days the Revenue has a r .....

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peal 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 or periods, even if the delay in disposing of the appeal is not attributable to the assessee." The relevant portion of the proviso has been underlined for the purpose of clarity and appreciation. 11. We ha .....

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l from extending the stay order. However, the Legislature in view of the said judgment and keeping in view the language of the existing provisions and the reasoning given in the said judgments has specifically introduced and added the words "not attributable to the assessee". This amendment/substitution made to the third proviso is significant. The said words are not redundant or inconsequential and in fact have been added in view of the ratio and the reasoning given in the aforesaid t .....

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