2014 (7) TMI 738 - HC - Central Excise

Appellate Tribunal can extend stay beyond 365 days if assessee cooperates. Order must be speaking.

Commissioner Versus Small Industries Development Bank of India

The Court held that the Appellate Tribunal has the jurisdiction to extend the stay beyond 365 days if the delay is not attributable to the assessee and if ... Power of tribunal to grant stay beyond the total period of 365 days - extension of stay granted earlier - extension order should be speaking or not - 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 passing a speaking order as observed hereinabove, extend stay even beyond the total period of 365 days from the date of grant of initial stay. However, as observed by the Hon’ble Supreme Court in the case of Kumar Cotton Mills Pvt. Ltd (2005 (1) TMI 114 - SUPREME COURT OF INDIA), it should not be construed that any latitude is given to the Appellate Tribunal to extend the period of stay except on good cause and if the Appellate Tribunal is satisfied that the matter could not be heard and disposed of by reason of the fault of the Appellate Tribunal for the reasons not attributable to the assessee. It also may not be construed that the Appellate Tribunal can extend stay indefinitely. 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 hereinabove, the Appellate Tribunal may extend the stay even beyond 365 days from the date of grant of initial stay and even thereafter. - Thus, on expiry of maximum period of 180 days the assessee / appellant is required to submit application for extension of stay each time and the Appellate Tribunal is required to consider the individual case and pass a speaking order, as stated hereinabove. - Decided partly in favor of revenue. Issues Involved:1. Jurisdiction of the Appellate Tribunal to extend stay beyond 365 days under Section 35C(2A) of the Central Excise Act, 1944.2. Requirement for the Appellate Tribunal to pass a speaking/reasoned order while extending the stay beyond 365 days.Issue-wise Detailed Analysis:1. Jurisdiction of the Appellate Tribunal to Extend Stay Beyond 365 Days:The primary issue is whether the Appellate Tribunal has the jurisdiction to extend the stay beyond the total period of 365 days as stipulated under Section 35C(2A) of the Central Excise Act, 1944. The revenue argued that the Tribunal has no jurisdiction to extend the stay beyond 365 days and that any such extension would be without jurisdiction and contrary to the statutory provisions. The revenue contended that the third proviso to Section 35C(2A) mandates that the stay order stands vacated automatically after 365 days if the appeal is not disposed of within that period, attributing the delay to the assessee.However, the respondents argued that the issue is not res-integra and referred to the Supreme Court's decision in the case of Commissioner of Cus. & C. Ex., Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd., which held that the Tribunal has the power to extend the stay beyond 365 days if the delay is not attributable to the assessee. They emphasized that the legislative intent could not have been to punish an honest assessee for delays beyond their control, such as administrative exigencies or the Tribunal's workload.The Court referred to several decisions, including the Supreme Court's ruling in Kumar Cotton Mills Pvt. Ltd., where it was held that the Tribunal's power to extend the stay is not circumscribed if the delay is not attributable to the assessee. The Court also cited the Gujarat High Court's decision in Poly Fill Sacks vs. Union of India, which interpreted Section 35C(2A) to mean that the Tribunal's power to grant stay is not curtailed by the provisos and that the Tribunal can extend the stay beyond 365 days if the delay is not due to the assessee's fault.Based on these precedents, the Court concluded that the Tribunal has the jurisdiction to extend the stay beyond 365 days if the delay is not attributable to the assessee and if the Tribunal is satisfied that the assessee has cooperated in the early disposal of the appeal. The Tribunal must review the situation every 180 days and pass a speaking order while extending the stay.2. Requirement for the Appellate Tribunal to Pass a Speaking/Reasoned Order:The second issue is whether the Appellate Tribunal is required to pass a speaking and reasoned order while extending the stay beyond 365 days. The revenue argued that the Tribunal must pass a speaking order considering the third proviso to Section 35C(2A), which requires the Tribunal to be satisfied that the delay is not attributable to the assessee.The respondents contended that the Tribunal must consider the facts of each case and arrive at a subjective satisfaction regarding the delay and the assessee's cooperation. They argued that the Tribunal must pass a speaking order to ensure transparency and accountability.The Court agreed with the respondents and emphasized that the Tribunal must pass a speaking order while extending the stay, detailing its satisfaction that the delay is not attributable to the assessee and that the assessee has cooperated in the early disposal of the appeal. The Tribunal must review the situation every 180 days and pass a detailed order to ensure that the extension of the stay is justified.Conclusion:The Court answered the first question in favor of the assessee, holding that the Tribunal has the jurisdiction to extend the stay beyond 365 days if the delay is not attributable to the assessee and if the Tribunal is satisfied that the assessee has cooperated in the early disposal of the appeal. The second question was answered in favor of the revenue, requiring the Tribunal to pass a speaking and reasoned order while extending the stay. The Court remanded the matters to the Appellate Tribunal to pass appropriate orders afresh, ensuring that the Tribunal follows the guidelines laid down in the judgment. The stay orders were extended for a further period of two months to allow the Tribunal to complete this exercise.