2014 (11) TMI 419 - HC - Central Excise

Power of Tribunal to extend stay beyond the period of 365 days - extension of stay granted earlier - Held that - In view of the decision in case of Commissioner vs. Small Industries Development Bank of India (2014 (7) TMI 738 - GUJARAT HIGH COURT) it can be concluded that the Tribunal did not lack the power to extend stay beyond 365 days from the initial date of granting stay. However, if the stand of the revenue is that such extension was without recording reasons or without passing speaking order as required by the decision of this Court in case of Commissioner vs. Small Industries Development Bank of India (2014 (7) TMI 738 - GUJARAT HIGH COURT) it would be open for the Department to move a rectification application before the Tribunal.

Summary

Issues:
Extension of stay beyond 365 days under Section 35C(2A) of the Central Excise Act, 1944 without recording reasons or passing a speaking order.

Analysis:
The Department filed an appeal challenging the Customs, Excise and Service Tax Appellate Tribunal's decision extending the stay by six months or until the appeal's disposal, whichever is earlier, beyond the initial 365-day period granted under Section 35C(2A) of the Central Excise Act, 1944. The issue raised was whether the Tribunal could extend the stay beyond 365 days. The High Court referred to the case of Commissioner vs. Small Industries Development Bank of India, where it was held that the Tribunal could extend the stay beyond 365 days if the delay in appeal disposal was not due to the appellant and the Tribunal was satisfied with the appellant's cooperation. The Court emphasized that the Tribunal should review the situation every 180 days and consider extension applications on a case-by-case basis. The Court also stressed the importance of disposing of appeals promptly, especially those where stay was against the revenue.

The Department argued that the Tribunal extended the stay without providing reasons, contending that the Tribunal should only extend the stay for valid reasons. Citing the case of Commissioner vs. Small Industries Development Bank of India, the Court agreed that the Tribunal should pass a speaking order while extending the stay. Consequently, the matters were remanded to the Tribunal to pass appropriate orders within two months, ensuring that the stay order continued during this period. The Court directed the Tribunal to dispose of the appeals promptly even during the extended stay period.

In conclusion, the High Court held that the Tribunal had the authority to extend the stay beyond 365 days under certain conditions as per the decision in Commissioner vs. Small Industries Development Bank of India. However, if the extension lacked proper reasons or a speaking order, the Department could file a rectification application before the Tribunal. The tax appeal was disposed of with these observations, emphasizing the importance of recording reasons and passing speaking orders when extending stays beyond the statutory period.