CX/CUS/ST - Extension of Stay beyond 365 days, whether CESTAT has power - Matter referred to Larger Bench: High Court
By TIOL News Service
NEW DELHI, JULY 17, 2015 : BY an order dated 05.01.2015, the CESTAT allowed the Miscellaneous Applications for stay filed by the assessee following the decision of the Larger Bench of the CESTAT in Haldiram India Pvt. Ltd. v. CCE, Delhi - 2014-TIOL-1965-CESTAT-DEL-LB.
The view taken by the CESTAT in the said LB decision was that where delay in disposal of the appeal is not attributable to the Appellant then the extension of stay beyond 365 days can be granted notwithstanding the third proviso to Section 35C(2A) of the CEA, 1944.
Incidentally, against the aforementioned decision of the Larger Bench of the CESTAT an appeal CEAC No. 18/2015, was filed by the CCE & the same was disposed of by a Division Bench of the Delhi High Court by an order dated 5th May 2015 which reads:
"The Revenue challenges an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) whereby it directed extension of the interim order granted in respect of the respondent assessee. It is brought to the notice of this Court at the outset that in a similar situation, where an identically phrased amendment to the Income Tax Act, 1961, denying the power and jurisdiction to extend the interim order beyond 365 days was involved, the Court in CIT v. Maruti Suzuki (India) Ltd. - 2014-TIOL-246-HC-DEL-IT held that the Tribunal is bound by the provision and that the power to extend such interim orders is dependent on the exercise of discretion by the High Court under Article 226 of the Constitution. In these circumstances, the impugned order cannot be sustained. However, the appellant Revenue is restrained from taking any coercive action against the respondent/assessee for four weeks to enable the latter to move this Court under Article 226 of the Constitution of India, if so advised.
The appeal is disposed of in the above terms."
Be that as it may, the CCE, Delhi is in appeal against the CESTAT order dated 05.01.2015 referred above.
The Respondent submitted that the observation of the High Court in the above order dated 05.05.2015 to the effect that there was "an identically phrased amendment" to the Income Tax Act, 1961 was perhaps not correct in view of the fact that the additional words "even if the delay in disposing of the appeal is not attributable to the assessee" is not to be found in the third proviso to Section 35 C (2A) of the CEA, 1944.
Attention was also drawn to a judgment dated 19th May 2015 of another Division Bench of this Court in Writ Petition (C) No. 1334/2015 and batch (Pepsi Foods Pvt. Ltd. v. Assistant Commissioner of Income Tax) - 2015-TIOL-1306-HC-DEL-IT where the Court was concerned with the challenge to the constitutional validity of the third proviso to Section 254 (2A) of the IT Act on the ground that it sought to obliterate the distinction between Assessees who contributed to the delay in disposal of an appeal and those who had not. By the said judgment the Division Bench allowed the writ petitions and struck down the third proviso to Section 254 (2A) of the IT Act to the extent it obliterates the distinction. Furthermore, the coordinate Division Bench in Pepsi Foods expressed agreement with a judgment of the High Court of Bombay in Narang Overseas P. Ltd. v. Income Tax Appellate Tribunal, Mumbai - 2007-TIOL-487-HC-MUM-IT and held 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 High Court observed -
"6. The decision in Pepsi Foods was delivered two weeks after the decision of the coordinate Division Bench of this Court in CCE v. Haldiram India Pvt. Ltd. In terms of the judgment in Pepsi Foods the CESTAT would, even in terms of the third proviso to Section 35 C (2A) of the Act, not be denuded of the power to extend the stay beyond 365 days in deserving cases. This is however, contrary to the judgment of the coordinate Division Bench in CCE v. Haldiram India Pvt. Ltd. This Court, being a coordinate Bench of equal strength is therefore constrained to refer to a larger Bench the question of correctness of the decision dated 5th May 2015 in CEAC No. 18/2015 (Commissioner of Central Excise v. Haldiram India Pvt. Ltd.)"
The High Court, therefore, directed the Registry to place the appeal before the Chief Justice for constitution of a larger Bench to consider the aforementioned question.
Resultantly, in view of the above reference of the appeal to the larger Bench, the application for stay was dismissed.
In passing : Please also see 2015-TIOL-1239-CESTAT-DEL [ITC Ltd. vs. Commissioner of Customs, New Delhi]
(See 2015-TIOL-1608-HC-DEL-CX )
