Court refers conflicting judgment on extending stay beyond 365 days to larger Bench

The Court referred a case involving a challenge to the Customs, Excise and Service Tax Appellate Tribunal's decision allowing an extension of stay beyond 365 days to a larger Bench due to conflicting judgments. The Court cited a conflict between the rulings in Haldiram India Pvt. Ltd. and Pepsi Foods cases regarding the extension of stay provisions under the Central Excise Act. Consequently, the Court dismissed the application for stay in the present case and directed the matter to be placed before a larger Bench for clarification on the interpretation of the provisions related to extending stay beyond 365 days before the CESTAT.

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Issues: Challenge to CESTAT order allowing extension of stay beyond 365 days, Interpretation of third proviso to Section 35C(2A) of Central Excise Act, 1944, Conflict between judgments regarding extension of stay, Reference to larger Bench for correctness of previous decision, Dismissal of application for stay due to reference.

In the present case, the Commissioner of Central Excise (CCE), Delhi challenged an order by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowing extension of stay beyond 365 days. The CESTAT based its decision on a previous ruling in Haldiram India Pvt. Ltd. v. CCE, Delhi, stating that if the delay in disposal of the appeal is not due to the Appellant, then the extension of stay can be granted despite the third proviso to Section 35C(2A) of the Central Excise Act, 1944. However, a Division Bench of the Delhi High Court, in response to the CCE's appeal against the CESTAT decision, referred to a similar situation in the Income Tax Act and held that the power to extend interim orders beyond 365 days lies with the High Court under Article 226 of the Constitution. The Court restrained the Revenue from taking coercive action for four weeks to allow the respondent to move the Court under Article 226. The Respondent argued that the Income Tax Act and Central Excise Act provisions were not identical, citing a judgment in Pepsi Foods Pvt. Ltd. v. Assistant Commissioner of Income Tax, where the distinction between Assessees contributing to appeal delays was upheld. This led to a conflict between the judgments in Haldiram India Pvt. Ltd. and Pepsi Foods cases, prompting the Court to refer the matter to a larger Bench for clarification.

The decision in Pepsi Foods, which upheld the power of the Tribunal to extend stay beyond 365 days in deserving cases, contradicted the ruling in Haldiram India Pvt. Ltd. This conflict necessitated a reference to a larger Bench by the Court to determine the correctness of the decision in CEAC No. 18/2015. As a result of this reference, the application for stay in the present case was dismissed. The matter was directed to be placed before the Hon'ble Chief Justice for the constitution of a larger Bench to address the question of the conflicting judgments and the interpretation of the provisions relating to the extension of stay beyond 365 days in appeals before the CESTAT.

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