CX/CUS/ST - Tribunal has power to grant extension of stay beyond 365 days - DB decision in Haldiram India Pvt Ltd overruled: Delhi HC Larger Bench
By TIOL News Service
NEW DELHI, AUG 18, 2015: BY an order dated 05.01.2015, the CESTAT allowed the Miscellaneous Applications for stay filed by Brew Force Machine Pvt. Ltd. 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.
The CCE, Delhi appealed against the CESTAT order dated 05.01.2015 referred above.
Incidentally, the appeal CEAC No. 18/2015filed by the CCE against the LB decision in Haldiram India Pvt. Ltd. was disposed of by the Division Bench of the Delhi High Court by an order dated 05.05.2015 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."
In the matter of the present appeal, 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" found in section 254(2A) of the Income Tax Actis not to be found in the third proviso to Section 35C(2A) of the CEA, 1944.
Attention was also drawn to a judgment dated 19.05.2015 of another Division Bench in Pepsi Foods Pvt. Ltd. v. Assistant Commissioner of Income Tax - 2015-TIOL-1306-HC-DEL-IT where the Court 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 expressed agreement with a judgment in Narang Overseas P. Ltd. - 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."
In view of the contrary judgments, the High Court, directed the Registry to place the appeal before the Chief Justice for constitution of a larger Bench. We reported this as - 2015-TIOL-1608-HC-DEL-CX.
The Full Bench has passed an order recently.
After reproducing the provisions of Section 35C(2A) of the CEA, 1944 and Section 254(2A) of the IT Act, the Bench observed -
|
+ The difference in the language of the third proviso is apparent and striking. The words "even if the delay in disposing of the appeal is not attributable to the assessee" are missing and not incorporated in CE Act. Thus, the bar and prohibition created by enactment of the Finance Act, 2008 to the third proviso to Section 254(2A), would not be applicable to appeals preferred under Section 35C (2A) of the CE Act before CEGAT.
|
The Bench also extracted at length the decision in Maruti Suzuki (India) Ltd. (supra) and observed -
++ Thus, it is clear that in Maruti Suzuki (India) Ltd., the Division Bench was of the opinion that as per the earlier provisions before substitution of the third proviso by Finance Act, 2008, Income Tax 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.
++ It is, therefore, clear that the legislature had by Finance Act, 2008 inserted the words 'even 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 Pvt. Ltd. observing that the ratio of the aforesaid decision in Maruti Suzuki (India) Ltd. would apply even to Section 35C(2A) of the CE Act. The decision of the Division Bench in Haldiram India Pvt. Ltd. is hereby overruled.
The reference was answered accordingly.
In passing: By the Finance Act, 2014 (w.e.f 6.8.2014) in section 35C, in sub-section (2A ), the first, second and third proviso have been omitted.
(See 2015-TIOL-1873-HC-DEL-CX-LB)
