By TIOL News Service

MUMBAI, JUNE 20, 2015: THE assessee has challenged the order passed by the CESTAT before the Bombay High Court.

It is the contention of the assessee that the Tribunal was obliged to hear the appeal on merits irrespective of the failure of the appellant-assessee to comply with the conditions imposed while granting stay in the matter . For this submission, the appellant relies on the apex court decision in Balaji Steel Re-rolling Mills 2014-TIOL-92-SC-CX-LB and emphasized that the law laid down by the apex court is binding on the High Court.

The Counsel for the Revenue submitted that the Tribunal had imposed a very reasonable condition (of making pre-deposit) while granting stay but since the assessee did not comply,their appeal was dismissed as also on the ground of non-prosecution. Further, their application for restoration of appeal was also not entertained. Inasmuch as, in the circumstances,the judgment of the Supreme Court cited cannot be of any assistance, submitted the counsel.

The High Court extracted the judgment of the apex court cited supra and inter alia observed -

+ We are of the view that the same (judgment) analyses the powers of the tribunal while dealing with an appeal. The tribunal has to be specifically vested with the power to dismiss the appeal for want of prosecution. We are inclined to apply the law laid down by the Hon'ble Supreme Court of India to the present case as well.

+ However, we find that no litigant much less placed on par with the appellant before us has the absolute right to insist on the appeal being heard even when he does not comply with the conditions imposed on him while granting him discretionary and equitable relief of interim stay of recovery of taxes.

+ The conditions that have been imposed by the tribunal while granting such a discretionary and equitable relief have never been questioned by the appellant and rather he has accepted the same. He, therefore, cannot be permitted to wriggle out of the same and by relying on the present state of law as emerging from the judgment of the Hon'ble Supreme Court of India.

The High Court also observed that it is inclined to set aside the impugned order of the tribunal and restore the appeals for decision on merits by the tribunal but the appellant-assessee cannot insist on non-compliance with the conditions imposed by the tribunal.

The High Court further added -

+ Having not complied with the conditions and thereafter inviting dismissal of his appeal, the appellant-assessee cannot insist on an unconditional adjudication of his appeal on merits. That would be putting a premium on his negligent and intentional act.

While mentioning that the apex court had not dealt with a situation where there was non-compliance with the conditions imposed by the tribunal on the appellant before it while entertaining an appeal and granting interim relief, the High Court noted that the law laid down in the said decision cannot be stretched and applied to a situation where the conditional order is not complied with and still the appeal must be decided on merits.

In fine, the High Court directed the appellant to deposit with the competent authority a sum of Rs.7 lakhs within a period of two months and produce proof thereof pursuant to which the Tribunal was required to hear the appeal filed on merits. It is also made clear that if the appellant remains absent despite sufficient notice the Tribunal can dispose of the appeal in accordance with law.

(See 2015-TIOL-1467-HC-MUM-CX)