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2016 (1) TMI 1101 - HC - Service TaxExtension of stay - 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 - Demand of Service tax along with interest and penalty - Business auxilliary service - Not disclosed the fact of providing this service - Held that - in view of the decisions of various High Courts in various case laws, wherever the appeal could not be decided by the Tribunal due to pressure of pendency of cases and the delay in disposal of the appeal is not attributable to the assessee in any manner, the interim protection can continue beyond 365 days in deserving cases. - Decided against the revenue
Issues Involved:
1. Whether the Tribunal is empowered to extend the interim order beyond the specified maximum period prescribed under Section 35C (2A) of the Central Excise Act, 1944. Detailed Analysis: Issue 1: Tribunal's Power to Extend Interim Order Beyond 365 Days Facts and Background: The appellant-revenue filed appeals against the final order of the Tribunal, which extended the stay for a period of six months beyond the initial 365 days. The respondent-assessee, engaged in providing business auxiliary services, had not registered for service tax and was issued a show-cause notice. The Tribunal initially granted a stay, which was extended beyond 365 days, leading to the present appeals. Statutory Provisions: Section 35C(2A) of the Central Excise Act, 1944, before its omission by the Finance Act, 2014, contained three provisos. These provisos mandated that: - The Tribunal should dispose of the appeal within 180 days from the stay order. - If not disposed of within 180 days, the stay order would stand vacated. - The Tribunal could extend the stay for another 185 days if the delay was not attributable to the assessee, but not beyond 365 days in total. Legislative History: - The Finance Act, 2002 introduced sub-section 2A. - The Finance Act, 2013 added the third proviso allowing extension beyond 180 days but not exceeding 365 days. - The Finance Act, 2014 omitted all three provisos, removing the bar on extending stay orders beyond 365 days. Judicial Interpretations: 1. Salasar Steel and Power Limited (Chhattisgarh High Court): - The statutory provision is discretionary and depends on the facts of each case. - If the Tribunal cannot take up the appeal due to pendency, stay cannot be vacated. 2. Vodafone Essar South Limited (Allahabad High Court): - The Tribunal can extend the stay beyond 365 days if the delay is not attributable to the assessee. - The omission of the provisos means stay orders continue unless limited by the Tribunal. 3. Brew Force Machine Pvt. Limited (Delhi High Court): - Affirmed the Tribunal's power to extend stay beyond 365 days if the delay is not attributable to the assessee. 4. Pepsi Foods Pvt. Limited (Delhi High Court): - The Tribunal can grant extension beyond 365 days in deserving cases. - The third proviso to Section 254(2A) of the Income Tax Act, 1961, similar to the Central Excise Act, was struck down as violative of Article 14 of the Constitution. 5. Kumar Cotton Mills Pvt. Limited (Supreme Court): - The Tribunal can extend the stay beyond 365 days for reasons not attributable to the assessee. Conclusion: The High Court concluded that the Tribunal is empowered to extend the interim order beyond 365 days if the delay in disposal of the appeal is not attributable to the assessee. The omission of the provisos by the Finance Act, 2014, supports this interpretation. The appeals were dismissed, and the Tribunal was directed to decide the pending appeals expeditiously within six months. Summary: The judgment addressed whether the Tribunal could extend interim orders beyond 365 days under Section 35C(2A) of the Central Excise Act, 1944. The Court analyzed the legislative history, statutory provisions, and judicial interpretations, concluding that the Tribunal has the power to extend the stay beyond 365 days if the delay is not attributable to the assessee. The appeals were dismissed, and the Tribunal was directed to expedite the pending appeals.
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