TaxTMI 
TaxTMI 
2013 (4) TMI 101
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....demand raised in pursuance of such Circular. The Circular dated 1.1.2013 contemplates that the recovery shall be affected, if stay has not been granted within 30 days (hereinafter referred as 'second set of cases'). 2. In CWP No.844 of 2013 falling in the first set of cases, the petitioner has pointed out that against the Order-in-Original dated 31.05.2007 and 21.08.2007, the appeals were filed before the Commissioner (Appeals), Customs and Central Excise, Chandigarh. The Commissioner (Appeals) upheld the order passed by the Adjudicating Authority on 17.01.2008. The petitioner filed further appeal before the Customs, Excise and Service Tax Appellate Tribunal (for short 'the Tribunal'). The Tribunal waived the deposit of duty and penalty as well as recovery subject to deposit of Rs.5 lacs vide order dated 19.05.2008. Since the appeal could not be heard within the prescribed period of one hundred and eighty days for no fault on the part of the petitioner, therefore, in terms of the Supreme Court decision in Commissioner of Customs and Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd. 2005 (180) ELT 434, the Tribunal ordered the interim stay to continue till further orders....
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..... He also referred to a Larger Bench order of the Tribunal in IPCL vs. Commissioner of Central Excise, Vadodara 2004 (169) ELT 267, wherein the Tribunal observed that the inherent jurisdiction of the Tribunal to grant interim relief so as to make the ultimate relief effective cannot be curtailed indirectly by sub-section (2A) of the Act. The Bench observed as under:- "6. The observation of the Bench that if the Tribunal grants further extension of stay beyond the period of 180 days the amendment would become redundant is also not justified. A similar contention raised in regard to sub-section (2A) of Section 254 of the Income Tax Act was not accepted by the Income Tax Appellate Tribunal in Centre for Women's Development Studies vs. Deputy Director of Income Tax 2002 (257) ITR 60. The inherent jurisdiction of the Tribunal to grant interim relief so as to make the ultimate relief effective cannot be curtailed indirectly by subsection (2A). At the end of the period of 180 days when the appellant makes an application for extension of the stay the Tribunal can always consider whether there is any change in the circumstances which would justify extension or modification o....
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.... answering the issue raised for consideration by the Larger Bench, as above, we send back the Miscellaneous Application for hearing by the appropriate Bench." 5. In CWP No.1606 of 2013 falling in the second set of cases, the Adjudicating Authority passed an order on 20.04.2002 raising demand of Cenvat credit of Rs.1,46,01,332/-. The petitioner filed an appeal before the Tribunal along with an application for waiver of pre-deposit, which is now pending for 07.03.2013. Such application was listed on 30.07.2012, 06.11.2012, 14.11.2012 and 30.11.2012. The Board has issued a Circular dated 01.01.2013 instructing the Administrative Officers to initiate recovery proceedings in the matters which are pending before the Appellate Authorities after filing of an appeal. Thereafter, a notice was served upon the petitioner on 15.01.2013. Feeling aggrieved, the petitioner challenged the Circular dated 01.01.2013 and notice dated 15.01.2013 before this Court. 6. It is argued that the assessee has no control over the decision of appeals either by the Commissioner (Appeals) or by the Tribunal, as final hearing and the decision thereon is dependent upon numerous factors on which the assessee ha....
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....d in initiating recovery proceedings on the basis of Circular dated 01.01.2013, even when an application for waiver of pre-deposit is pending before the Appellate Authorities for the reason that on such application for stay or waiver of pre deposit, no orders have been passed? (2) Whether the second proviso in sub-section (2A) of Section35C is directory and that the Tribunal in appropriate circumstances can extend the period of stay beyond 180 days? 9. At this stage, the relevant provisions of the Act as well as the Circular dated 01.01.2003 need to be extracted. The same are as under:- Central Excise Act, 1944 "35A. Procedure in appeal:- (1) The Commissioner (Appeals) shall give an opportunity to the appellant to be heard, if he so desires. (2) The Commissioner (Appeals) may, at the hearing of an appeal, allow an appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission off that ground from the gro....
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....sp; Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing." Circular dated 01.01.2003 "xxx xxx (2) Henceforth, recovery proceedings shall be initiated against a confirmed demand in terms of the following order: Sr. No. Appellate Authority Situation Directions regarding recovery xx xx xx 3. Commissioner (Appeals)....
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.... Mehta vs. Collector of Customs (Preventive), Bombay AIR 1988 SC 2010. 12. In Hoosein Kasam Dada (India) Ltd. vs. State of Madhya Pradesh AIR 1953 SC 221, the Court held that a provision which is calculated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. It was held that in truth such provisions whittles down the right itself and cannot be regarded as a mere rule of procedure. It was held to the following effect:- "10. The learned Advocate urges that the requirement as to the deposit of the amount of the assessed costs does not affect the right of appeal itself which still remains intact, but only introduces a new matter of procedure. He contends that this case is quite different from the case of Sardar Ali V. Dolimuddin (E) AIR 1928 Cal. 640, for in this case it is entirely in the power of the appellant to deposit the tax if he chooses to do so whereas it was not within the power of the appellant in that case to secure a certificate from the learned Single Judge who disposed of the second appeal. In the first place the onerous condition may in a given case prevent the exercise of the right of appea....
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....te Judge to dispense with the compliance of the above requirement. All that the statutory provision seeks to do is to regulate the exercise of the right of appeal. The object of the above provision is to keep in balance the right of appeal, which is conferred upon a person who is aggrieved with the demand of tax made from him, and the right of the Corporation to speedy recovery of the tax. The impugned provision accordingly confers a right of appeal and at the same time prevents the delay in the payment of tax. xxx xxx The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal. We fail to understand as to why the legislature while granting the right of appeal cannot impose conditions for the exercise of such right. In the absence of any special reasons there appears to be no legal or constitutional impediment to the imposition of such conditions. It is permissible, for example, to prescribe a condition in criminal cases that unless a convicted person is released on bail, he must surrender to custody before his appeal against the sentence of imprisonment ....
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....e implementation of the ceiling policy; secondly, having regard to sub-sections (8) and (9) it is clear that the cash deposit or bank guarantee is not by way of any exaction but in the nature of securing mesne profits from the person who is ultimately found to be in unlawful possession of the land; thirdly, the deposit or the guarantee is correlated to the land holdings tax (30 times the tax) which, we are informed, varies in the State of Haryana around a paltry amount of Rs.8 per acre annually; fourthly, the deposit to be made or bank guarantee to be furnished is confined to the land holdings tax payable in respect of the disputed area i.e. the area or part thereof which is declared surplus after leaving the permissible area to the appellant or petitioner. Having regard to those aspects, particularly the meager rate of the annual land tax payable, the fetter imposed on the right of appeal/revision, even in the absence of a provision conferring discretion on the appellate/revisional authority to relax or waive the condition, cannot be regarded as onerous or unreasonable. The challenge to Section 18(7) must, therefore, fail." It was on the facts of the aforesaid case, the legalit....
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....inappropriate. The appellate judge's incidental and ancillary powers should not be curtailed except to the extent specifically precluded by the statute. ..........." 20. The Full Bench of this Court in M/s Emerald International Ltd. case (supra) examined the laws relating to Sales Tax Act in the States of Punjab and Haryana and condition of pre-deposit of the amount of tax. The Bench has inter alia held that appeal is a creation of statute and in case person wants to avail the right of appeal, he has to accept the conditions imposed by the Statute and the legislature could impose condition for exercise of such a right. Therefore, neither there is constitutional nor legal impediment for imposition of such a condition. 21. In Mardia Chemicals Ltd. and others vs. Union of India and others (2004) 4 SCC 311, wherein the condition of pre-deposit in respect of remedy under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was found to be bad rendering the remedy illusory. The Court observed as under:- "61. In the case of Seth Nandlal (supra), while considering the question of validity of pre-deposit....
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....ct of as to when a provision is to be treated as directory or mandatory, but in every case the object of Statute must be looked. 24. One of the earlier cases is the Constitution Bench judgment reported as State of U.P. vs. Manbodhan Lal Srivastava AIR 1957 SC 912, wherein it was quoted that: "The question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained, not only from the phraseology of the provision"; but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other..........."; 25. In Banwarilal Agarwalla vs. State of Bihar AIR 1961 SC 849, a Constitution Bench of the Supreme Court held that no general rule can be laid down for deciding whether any particular provision in a statute is mandatory, meaning thereby that non-observance thereof involves the consequence of invalidity or only directory, i.e., a direction the nonobservance of which does not entail the consequence of invalidity, whatever other cons....
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....publication of award within a period of 30 days does not entail any penalty and, therefore, the provision as to time in section 17(1) is merely directory. 29. In Topline Shoes Ltd. vs. Corporation Bank (2002) 6 SCC 33, the Supreme Court negative the argument raised that the State Commission constituted under the Consumer Protection Act, 1986 has no power to accept a reply filed beyond a total period of 45 days. It was held that such provision is not mandatory in nature. No penal consequences are prescribed and the period of extension of time 'not exceeding 15 days', does not prescribe any kind of period of limitation. The provision is directory in nature. The provision is more by way of procedure to achieve the object of speedy disposal of such disputes. It is an expression of desirability in strong terms. But it falls short of creating any kind of substantive right in favour of the complainant reason of which the respondent may be debarred from placing his version in defence in any circumstances whatsoever. 30. In P.T.Rajan vs. T.P.M. Sahir (2003) 8 SCC 498, the Supreme Court held that where a statutory functionary is asked to perform a statutory duty within the time prescri....
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.... prejudice is caused (See Raza Buland Sugar Co. Ltd. vs. Municipal Board, Rampur, AIR 1965 SC 895, State Bank of Patiala vs. S.K.Sharma (1996) 3 SCC 364, Venkataswamappa vs. Special Deputy Commissioner (Revenue) (1997) 9 SCC 128 and Rai Vimal Krishna vs. State of Bihar (2003) 6 SCC 401)." 31. Recently in Delhi Airtech Services Private Limited and another vs. State of Uttar Pradesh and another (2011) 9 SCC 354, the Supreme Court held to the following effect:- "117. In Principles of Statutory Interpretation, 12th Edn., 2010, Justice G.P. Singh, at pp. 389-92 states as follows:- "......... As approved by the Supreme Court:- 'The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other.' &n....
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....consequence of noncompliance, is the requirement to be regarded as imperative (or mandatory) or forms prescribed by the statute have been regarded as essential to the act or thing regulated by it, and their omission has been held fatal to its validity. In others, such prescriptions have been considered as merely directory, the neglect of them involving nothing more than liability to a penalty, if any were imposed, for breach of the enactment. 'An absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially'. It is impossible to lay down any general rule for determining whether a provision is imperative or directory. 'No universal rule,' said Lord Campbell, L.C. 'can be laid down for the construction of statutes, as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of Justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.' and Lord Penzance said:- ....
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....andatory or otherwise. 120. Reference can be made to the following paragraphs of May George (2010) 13 SCC 98: (SCC pp. 103-05, paras 16-17 and 22-23) "16. In Dattatraya Moreshwar v. State of Bombay AIR 1952 SC 181 this Court observed that law which creates public duties is directory but if it confers private rights it is mandatory. Relevant passage from this judgment is quoted below: (AIR p. 185, para 7) '7. ......... It is well settled that generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice of the courts to hold such provisions to be directory only, the neglect of them not affecting the validity of the acts d....
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....ose it seeks to serve and the consequences that would flow from the construction to be placed thereon. The word "shall";,therefore, ought to be construed not according to the language with which it is clothed but in the context in which it is used and the purpose it seeks to serve. The meaning has to be ascribed to the word "shall"; as mandatory or as directory, accordingly. Equally, it is settled law that when a statute is passed for the purpose of enabling the doing of something and prescribes the formalities which are to be attended for the purpose, those prescribed formalities which are essential to the validity of such thing, would be mandatory. However, if by holding them to be mandatory, serious general inconvenience is caused to innocent persons or general public, without very much furthering the object of the Act, the same would be construed as directory.' xxx xxx xxx 129. Statutes which encroach upon rights, whether as regards person or property, are subject to strict construction in the same way as penal Acts. It is a recognised rule that they should be interpreted, if possible, so as to resp....
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..... Agricultural Credits Society Ltd. vs. Swapan Kumar Jana, (1997) 1 CHN 189 and Pt. Rajan vs. T.P.M. Sahir and others (2003) 8 SCC 498. The language of sub-section (2A), which has been inserted by Finance Act, 1999, makes it clear that the Legislature did not intend to make the time period of 4 years for disposal of the application as mandatory. This view of ours finds support from the principle stated in Halsbury's Laws of England in the following words:- "If public officials or a public body fail to perform any public duty with which they have been charged, an order of mandamus will lie to compel them to carry it out, even though the time prescribed by statute for the performance of the duty may have passed." In view of the above discussion, we hold that failure of the Tribunal to decide an application made under Section 254(2) of the Act within 4 years did not denude it of the jurisdiction to decide the application on merits." 33. A Division Bench of this Court in a judgment reported as Stelco Strips Ltd. vs. State of Punjab and others (2009) 19 VST 498 (PandH) in which one of us (Hemant Gupta, J.) was a ....
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....e further proviso contemplates that where an application is filed before the Commissioner (Appeals) and if it is possible to do so, the Commissioner (Appeals) shall decide such application within 30 days from the date of its filing. 37. Column 4 of the impugned Circular contemplates that if no stay is granted within 30 days, the recovery is to be initiated. The Commissioner (Appeals) is empowered to dispense with the requirement of deposit of duty demanded and penalty levied, if it is satisfied that such levy would cause undue hardship. The provision further contemplates that the Commissioner (Appeals) is to decide such application within 30 days. The effect of the Circular is if such application is not decided within 30 days by the Commissioner (Appeals), the recovery proceedings can be initiated against the assessee. 38. We find that the provision contemplating that the Commissioner (Appeals) should decide application within 30 days is directory. Such intention is evident from the fact that it contemplates that Commissioner (Appeals) shall "where it is possible to do so";, decide application to dispense with the requirement of deposit of duty demanded and penalty levied wit....
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....eals and/or the applications for dispensation of duty demanded and penalty levied can be decided within a period of 30 days. If the Central Government has no power to control the working of the Appellate Authorities and also to ensure that all appeals are decided within the time frame, such condition is wholly unwarranted. The assessee has also no control over such Authorities. The Commissioner (Appeals), a quasi judicial Tribunal, has a jurisdiction to waive the condition of pre-deposit of duty demanded and penalty levied, but such judicial discretion vested in the Authority under the Act cannot be interfered with in any manner administratively. 40. Since the Statute confers a right of appeal on the assessee and also right to make an application to dispense with deposit of the duty demanded and penalty levied in the manner which the Appellate Authority deems appropriate. Therefore, unless such jurisdiction is exercised by the Appellate Authority either way i.e. to grant benefit of waiver or impose such conditions as it may consider appropriate, the Board cannot direct the Administrative Officers to recover the demand raised against the assessee. The statutory right of appeal or....
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....bsp; 30. The conditions referred to in Sub-section (1) of Section 25 as regard time when such certificate is to be produced would, thus, mean those which were within the control and power of the importer. If it is not within the power and control of the importer and depends upon the acts of other public functionaries, non-compliance of such condition, subject to just exception cannot be held to be a condition precedent which would disable it from obtaining the benefit therefrom for all times to come." 43. Thus, an aggrieved party such as an assessee could only file appeal along with an application for waiver of the pre-deposit. It is, thereafter, for the public functionary i.e. Commissioner (Appeals) or the Tribunal to pass an order on such appeal and/or application. The decision on appeal and on application is not within the power and control of the assessee, but depends upon the acts of public functionary. The provisions of a Statute relate to performance of a public duty. The failure of the Appellate Authority to decide appeal and/or application would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty. In vi....
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.... after the filing of the appeal if no stay is granted. Counsel appearing on behalf of the Revenue submits that the Board has directed that a period of thirty days should be allowed to lapse after the filing of the appeal, allowing the assessee time to move the Appellate Authority for the disposal of the stay application. The reason why the submission cannot be accepted is because, in a situation where the Commissioner (Appeals) or, as the case may be, the CESTAT are unable to decide the application for stay within a period of thirty days of the filing of the appeal, it would be completely arbitrary to take recourse to coercive proceedings for the recovery of the demand until the application for stay is disposed of. Administrative reasons including the lack of adequate infrastructure, the unavailability of the officer concerned before whom the stay application has been filed, the absence of a Bench before the CESTAT for the decision of an application for stay or the sheer volume of work are some of the causes due to which applications for stay remain pending. In such a situation, where an assessee has done everything within his control by moving an application for stay and which rem....
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....evenue, the Commissioner (Appeals) shall decide the same expeditiously. 47. Thus, in respect of first question of law, it is held that direction to recover the duty demanded and penalty levied, if the stay was not granted within 30 days, contravenes the right of consideration of appeal and of an application for waiver of pre-deposit conferred under Section 35B read with Section 35F of the Act and is illegal. Such direction to the Administrative Officers to recover the amount pending consideration of application of waiver of pre-deposit is not justified and, thus, not enforceable in law. 48. Coming to the appeals filed or pending before the Tribunal, the right to appeal before the Tribunal is conferred under Section 35B of the Act. The Appellate Tribunal passes an order in terms of Section 35C of the Act. Sub-section (2A) contemplates that the 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. The second proviso inserted contemplates that if an order of stay is made in any proceedings relating to an appeal filed under sub-section (1) of Section 35B, the Appellate Tribunal shall....
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....fied therein, but the conditions specified have to be in relation to the assessee as something which is required to be complied with by the assessee. But where the assessee has no control over the functioning of the Tribunal, then the provision of vacation of stay cannot be sustained. 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. ....