TaxTMI 
TaxTMI 
2014 (7) TMI 738
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.... it is held that the learned Appellate Tribunal can extend the stay granted earlier beyond the total period of 365 days, the learned Appellate Tribunal is required to pass a speaking order / reasoned order considering 3rd proviso to section 35C(2A) of the Central Excise Act, 1944? 3.00. At the outset, it is required to be noted that in all these appeals which are pending before the learned Appellate Tribunal, initially the learned Appellate Tribunal granted stay which has been extended by the learned Appellate Tribunal by the impugned orders even beyond the total period of 365 days from the date of granting initial stay. Being aggrieved by and dissatisfied with the impugned orders of extending the stay granted earlier even beyond the total period of 365 days from the date of granting initial stay, the revenue has preferred all these Tax Appeals with the aforesaid substantial questions of law. 3.01. It is the case on behalf of the revenue that in view of the provisions contained in section 35C(2A) of the Act, the Appellate Tribunal has no jurisdiction at all to grant / extend stay granted earlier beyond the total period of 365 days from the date of the order passed under sub-secti....
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....ure has inserted third proviso to section 35C(2A) and more particularly when under third proviso to section 35C(2A), after 365 days stay granted earlier stands vacated automatically, the Appellate Tribunal has no jurisdiction at all to extend the stay beyond the total period of 365 days. 3.04. Mr.Yogesh Ravani, learned advocate appearing on behalf of the revenue has further submitted that waiver of predeposit would be under section 35F of the Central Excise Act and on the conditions mentioned in Section 35F. It is submitted that therefore, as such the pre-deposit is a condition precedent for considering the appeal on merits and waiver of pre-deposit can be said to be an exception. It is submitted that therefore, by insertion of section 35(2C) it is clear that waiver - partial waiver of pre-deposit will only be upto a year. It is submitted that the intention of the legislature from the Scheme of the Act is clear to collect tax after a year subject to the result of the appeal without any option. 3.05. It is further submitted by the learned advocates appearing on behalf of the revenue that giving option other way would frustrate the object achieved by legislation to collect duty dur....
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....t therefore, in the present case when the statute provides that in case where stay has been granted by the Appellate Tribunal in an appeal and the appeal is not disposed of within total period of 365 days, stay granted earlier stands vacated automatically. It is submitted that therefore, when the statute provides particular thing to be done in a particular way, then it has to be done in that manner and in no other manner and following any other course is not permissible. It is submitted that therefore, any exercise of power by the learned Appellate Tribunal extending stay beyond the total period of 365 days would be in teeth of 3rd proviso to section 35C(2A) of the Act and the same cannot be sustained. 3.11. Ms.Sejal Mandavia, learned advocate appearing on behalf of the revenue, has heavily relied upon the decision of the Karnataka High Court in the case of Commissioner of Income Tax, Benglore Vs. M/s.Ecom Grill Coffee Trading Pvt. Ltd. in Tax Appeal No.160 & 161 of 2012 by submitting that while considering para-materia provisions under the Income Tax Act, more particularly section 254(2A) of the Income Tax Act, the Karnataka High Court has held that the Appellate Tribunal has no ....
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.... of the Larger bench of the Appellate Tribunal in the case of IPCL Versus Commissioner of Central Excise, Vadodara, reported in (2004) 169 ELT 267 (Tri.LB). 4.02. Learned advocates appearing on behalf of the respective respondents - original appellants - assesses have submitted that as such third proviso to section 35C(2A) cannot be read down in such a manner that it may punish an honest and genuine assessee who is not at fault for non-disposal of the appeal within 365 days from the date of grant of initial stay. It is submitted that as such the legislature could not have intended to punish the person who is not at fault. 4.03. It is further submitted by the learned advocates appearing on behalf of the respondents - original appellants - assesses that the object and purpose of section 35C(2A) is and provision has been made for the purpose of curbing dilatory tactics of such of the assessees who after getting interim order in their favour to continue by delaying the disposal of the proceedings and that certainly deprive the revenue not only of the benefit of the assessed value but at the same time of the decision on the point which may have impact on the other pending matters. It ....
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....said provision from declaring it as ultra vires, the same is required to be read down by applying the principles of equity, justice and fair play, otherwise it would lead to arbitrary result or make it violative of Article 14 of the Constitution of India or would render it unconstitutional. 4.05. The learned advocates appearing on behalf of the respondents - original appellants - assesses have relied upon the following decision of Various High Courts inclusive of the decision of the Bombay High Court dated 30/7/2007 in the case of Navrang Overseas Pvt. Ltd. Vs. Income Tax Appellate Tribunal, Mumbai, rendered in Writ Petition No.1454 of 2007, by which, while interpreting the para-materia provisions under Income Tax Act - section 254-2A of the Act, it is held that if it is found by the Appellate Tribunal that delay in disposing of the appeal within 365 days is not attributable to assessee and there is no delay tactics adopted by the assessee - appellant, Appellate Tribunal can extend the stay even beyond the total period of 365 days:- (i) Poly Fill Sacks Versus Union of India, reported in (2005) 183 ELT 344 (Gujarat) ; (ii) Navrang Overseas Pvt. Ltd. Vs. Income Tax Appellate Tribu....
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....e appeal is not attributable to such party, 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." 5.03. As per section 35C(2A) as it stood prior to 10/5/2013 i.e. prior to adding second proviso, provided that when an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of section 35B, Appellate Tribunal shall dispose of the appeal within a period of 180 days from the date of such order. It also further provided that if such appeal is not disposed of within the period specified in the first proviso i.e. within 180 days from the date of order of initial stay, stay order shall, on the expiry of that period stand vacated. It appears that thereafter, third proviso came to be inserted to section 35C(2A) of the Act w.e.f. 10/5/2013 which provides that where such appeal is not disposed of within the period specified in the first proviso, i.e. within a period of....
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....e Supreme Court has observed and held as under : "6. The sub-section which was introduced in terrorem cannot be construed as punishing the assessees for matters which may be completely beyond their control. For example, many of the Tribunals are not constituted and it is not possible for such Tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay applications are not disposed of within the time specified. The reasoning of the Tribunal expressed in the impugned order and as expressed in the Larger Bench matter, namely, IPCL v. Commissioner of Central Excise, Vadodara (supra) cannot be faulted. However, we should not be understood 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." 5.04. Therefore, 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 effect w....
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....oyed by the statue in section 35C(2A) 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 the said decision it is also further 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 with the Orders of the Tribunal and sub-section 2A has been inserted w.e.f.11-05-2002 and reads as under: "[(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 under sub-section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period ....
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....viso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. Proviso can be taken aid of as useful guide to construction of the main enactment. If the enacting portion of a Section is not clear a proviso appended to it may give an indication as to its true meaning. As stated by Lord Herschel, 'of course, a proviso may be used to guide you in the selection of one or other of two possible constructions of the words to be found in the enactment, and show when there is doubt about its scope, when it may reasonably admit of doubt as to having this scope or that, 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 natural presumption is that but for the proviso, the enacting part of the Se....
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....th the provisos would frustrate 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 Tribunal and seek extension of stay already granted is misconceived - at least in relation to orders of the Tribunal made before 11-05-2002. Firstly, it proceeds on a fallacious premise as stated hereinbefore. Secondly, in absence of any change in circumstances why should the Tribunal be inundated with extension applications when admittedly, it is already overburdened and reeling under backlog of pending appeals. 11. However, in cases where the Revenue finds that a particular assessee having obtained 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 Se....
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....ttributable to the assessee regarding delay in disposal of the pending appeal or noncooperation and if appeal could not have been heard which is beyond control of the petitioner/assessee at least some balance has to be made to protect the right and interest of the assessee during the intervening period the appeal remain pending before the Tribunal. 15. In the instant case, the Tribunal after hearing the parties on application 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 continue to be operative during pendency of appeal vide order dt.23.1.2014, the proceedings which have been initiated by the department during the intervening period which have been treated to be withdrawn vide their later communication dt.29.1.2014 by fiction of law, b....
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....oviso 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 been delayed for acts attributable to the assessee. It cannot mean that a construction be given that the power to grant interim relief is denuded even if the acts attributable are not of the assessee but of the revenue or of the Tribunal itself. The power of the Tribunal, therefore, to continue interim relief is not overriden by the language of the third proviso to Section 254(2A). This would be in consonance with the view taken in Kumar Cotton Mills Pvt. Ltd (supra). There would be power in the 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." 5.06.4. Now, so far as the reliance placed by the department on the decision of Karnataka High Court in the case of M/s.Ecom Grill Coffee Trading Pvt. Ltd., by whic....
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....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 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 Appellate Tribunal to extend the stay indefinitely and that the Appellate Tribunal is not required to dispose of the appeal 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, 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 fro....
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.... the learned Appellate Tribunal has extended stay order, revenue can challenge the same before the higher forum / High Court. 5.09. All these appeals, on considering the impugned orders passed by the learned Appellate Tribunal extending stay, it appears that the impugned orders are non-speaking and non-reasoned orders and therefore, as such matters are required to be remanded to the learned Appellate Tribunal to consider the respective applications for extension of stay afresh and pass a detailed speaking order in each of the matters in light of the observations made hereinabove. 6.00. In view of the above and for the reasons stated above, question No.1 is answered against the revenue and in favour of the assessee and 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 Appe....