TaxTMI 
TaxTMI 
2016 (1) TMI 1101
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....stantial question of law:- "Whether Hon'ble CESTAT was right in holding that as per the third proviso to Section 35C(2A) of the Central Excise Act, 1944, it has got the power to grant extension of stay beyond 365 days from the initial grant of an order of stay?" 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The respondent assessee company was engaged in providing business Auxiliary service w.e.f November 2002 to M/s BSNL. Later on, it got itself registered for the category of business auxiliary service as per Section 65 of the Finance Act, 1994 and was not paying service tax under the service tax provisions. Investigation in the matter was carried out on the basis of information that the respondent was a channel partner of M/s BSNL and was engaged in the promotion of marketing of its services since November 2002 without getting itself registered for service tax. The respondent did not disclose the fact of providing this service to the department. In response to the letters dated 10.5.2008 and 11.9.2008 issued by the department, the assessee submitted that it received an amount of ` 1,18,78,093/- from BSNL durin....
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....hree 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." 7. It would be expedient to explore the legislative history of the said provision. Section 35C of the Act provides for the orders that may be passed by the Tribunal. It was amended by Section 140 by the Finance Act, 2002 with effect from 11.5.2002 whereby sub section 2A was inserted 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 proceedings relating to an appeal filed under sub section (1) of section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated." 8. Section 98 of the Finance Act, 2013 had further amended Section 35C(2A) of the Act with effect from 10.5.2013 wherein a third provis....
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....ntinue to remain in force unless it is limited by the Tribunal itself. 11. The aforesaid provisions have been subject matter of interpretation by various courts. 12. In Salasar Steel and Power Limited vs. Commissioner of C.Ex. & Customs, 2015(316) ELT 177 (Chhattisgarh), it was observed by the Chhattisgarh High Court that the statutory provision is itself discretionary in nature and its operation would depend upon the facts and circumstances of each case. If despite diligence on the part of the assessee, the Tribunal has not been able to take up the appeal due to pressure of pendency of cases, stay cannot be vacated. It was recorded as under:- "7. A bare reading of the statutory provision shows that the appellate Tribunal will endeavour to decide the appeal within a period of three years from the date it is filed. The significance of the words - "where it is possible to do so" cannot be lost site of in interpreting the provision. The statutory provision is therefore not a complete embargo that under all circumstances, notwithstanding any other issue involved, stay has to be mandatorily vacated. In other words, the statutory provision is itself discretionary in nature and its ....
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.... upon the expiry of 365 days. 10. Section 35C (2A) of the Act and its three proviso was interpreted by various courts including this Court. 11. In Writ Tax No.375 of 2014, M/s Garg Industries vs.Union of India through Secretary Revenue and two others, decided on 1.7.2014, 2014(307) ELT 432 (All.), a Division Bench of this Court held that the Tribunal in an appropriate case can extend the stay order, but not exceeding 365 days, and that, in an appropriate case, the High Court under Article 226 of the Constitution of India could extend the stay order. 12. In L.G. Electronics India Private Ltd. vs. Commissioner of Income Tax, in Writ Tax No.390 of 2015, decided on 22.4.2015, the Writ Court held that Section 35C (2A) of the Act does not prohibit the appellant in filing a second stay application where the appeal was not disposed of within 365 days and that the interim order would stand vacated upon the expiry of 365 days. The Court further held, that where a fresh stay application was filed, the Tribunal was competent to dispose of such application. 13. In Central Excise Appeal No.117 of 2015, Commissioner of Central Excise vs. M/s Mayank and Company, decided on 2.7.2015, a Divi....
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....or the purposes of this section "duty demanded" shall include,-- (i) amount determined under section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004." 16. By the aforesaid amendment the power given to the Tribunal to waive or impose a condition on the pre-deposit of duty has now being dispensed with. Now if an appeal is preferred, the assessee is required to deposit 7.5% of the duty levied before the appeal could be entertained. 17. Section 35C (2A) was amended by the provision of Section 103 of the Finance Act (2) of 2014 as under: "103. In the Central Excise Act, in Section 35C, in subsection (2A) the first, second and third proviso shall be omitted." 18. Section 35C (2A) of the Act as amended in 2002 and 2013 makes it apparently clear that the Tribunal was mandated to hear every appeal within a period of three years "where it is possible to do so". These words indicate that though a mandate was given to the Tribunal to decide the appeal within three years, it was not a mandatory provision, but, only a directory provision. Consequ....
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....ax Appellate Tribunal had power and authority to extend stay of demand beyond 365 days and the provisions as they then existed were to curtail long delays and ensure expeditious disposal of the appellate proceedings, but without curtailment of power to grant stay beyond 365 days. Reliance was placed on the observations of the Supreme Court in Commissioner of Customs and Central Excise Vs. Kumar Cotton Mills Pvt. Ltd. [2005] 180 ELT 434 (SC), the relevant portion of which was quoted. 8. It is, therefore, clear that the legislature had by Finance Act, 2008 inserted the words, ever 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 Act. The ratio and decision in the case of Maruti Suzuki (India) Ltd., therefore, would not be applicable to CEGAT while dealing with an application for stay or their power and jurisdiction to grant stay beyond 365 days, when the assessee is not responsible, under Section 35C (2A) of the CE Act. Therefore, we are unable to agree with the reasoning of the Division Bench of this Court in Haldiram India....
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....een stipulated. First of all, as per the first proviso to Section 254 (2A), a stay order could be passed for a period not exceeding 180 days and the Tribunal should dispose of the appeal within that period. The second proviso stipulates that in case the appeal is not disposed of within the period of 180 days, if the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to extend the stay for a period not exceeding 365 days in aggregate. Once again, the Tribunal is directed to dispose of the appeal within the said period of stay. The third proviso, as it stands today, stipulates that if the appeal is not disposed of within the period of 365 days, then the order of stay shall stand vacated, even if the delay in disposing of the appeal is not attributable to the assessee. While it could be argued that the condition that the stay order could be extended beyond a period of 180 days only if the delay in disposing of the appeal was not attributable to the assessee was a reasonable condition on the power of the Tribunal to the grant an order of stay, it can, by no stretch of imagination, be argued that where the assessee is not responsible for the....
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....position of law as interpreted by the Bombay High Court in Narang Overseas (supra), [(2007) 295 ITR 22 (Bom.)] with which we are in full agreement. Consequently, we hold that, where the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to grant extension of stay beyond 365 days in deserving cases. The writ petitions are allowed as above. 16. The Apex Court in Commissioner of Customs & Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Limited, (2005) 180 ELT 434, interpreting sub section 2A of Section 35C of the Act as introduced on 11.5.2002 had noticed 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 within the time specified. The reasoning of the Tribunal expressed in the impugned order and as expressed in the Larger Bench matter namely IPCL vs. Commi....