2014 (3) TMI 969 - HC - Central Excise

Stay Application - Held that - If no stay order is granted within 30 days from the date of preferring the appeal, the recovery proceedings have to be initiated irrespective of pendency of the appeal or pendency of the application for stay. - there may be various situations and circumstances when the Tribunal or the appellate Authority is unable to dispose of the stay applications within 30 days, for which, the appellant might not be at fault. In such situation, if the aforesaid notification to the extent as above is allowed to be operative, and consequently, recovery proceedings is initiated pending disposal of the stay application by the Tribunal or appellate authority it will result in rendering the appeal and application being infructuous. Notification indirectly interferes with the administration of justice holding out a threat to recover if stay application is kept pending for hearing beyond 30 days. The notification has been issued aiming at to put pressure indirectly upon appellate authority or Tribunal as the case may be, though the same are not binding upon appellate fora. A provision of this nature will work as arbitrary instrument against assessee litigants who are bona fide one. We cannot overlook the fact that some unscrupulous litigants may take advantage of the pendency of the stay application, so much so, the Revenue cannot proceed against them for a long time. Therefore, some balance should be struck so that both the parties will not be prejudiced - Decided in favour of assessee.

Summary

Issues:
Challenge against Sl. Nos. 6 and 9 of Notification dated 1-1-2013 regarding recovery proceedings in tax appeals.

Analysis:
The High Court considered the provisions of Sl. Nos. 6 and 9 of the Notification dated 1-1-2013, which outlined the initiation of recovery proceedings in tax appeals if no stay order is granted within 30 days of filing the appeal. The Court acknowledged the concern raised by the petitioners' counsel regarding the potential adverse impact on appellants due to delays in disposing of stay applications by the Tribunal or appellate authority. The Court noted that enforcing the notification as it stands could render the appeal and application futile in such circumstances.

The Court observed that the notification indirectly interfered with the administration of justice by pressuring the appellate authority or Tribunal to expedite stay application decisions within 30 days. The Court highlighted the risk of unscrupulous litigants exploiting the delay in stay application processing to avoid revenue recovery for an extended period. To address this imbalance and prevent prejudice to either party, the Court interpreted and modified the notification to exempt cases where the delay in deciding the stay application was not the fault of the assessee/appellant.

Therefore, the Court ruled that when a stay application remains pending for over 30 days due to reasons beyond the appellant's control, the notification would not apply, citing the principle of "actus curiae neminem gravabit" (acts of court do not prejudice anyone). Consequently, the Court disposed of the writ petitions by modifying the application of the notification and ordered a halt to recovery proceedings until the Tribunal made a decision on the pending stay application.

In conclusion, the High Court's judgment provided a balanced approach to prevent abuse of the system by unscrupulous litigants while safeguarding the rights of bona fide assessee litigants. The modification to the notification aimed to ensure fairness and prevent undue prejudice to either party involved in tax appeals.