2015 (5) TMI 27 - HC - Central Excise

Extension of stay beyond the period of 365 days - Power of Tribunal to extend stay - Held that - If the assessee has not sought adjournment and has not avoided hearing of the appeal in any manner, there can be little or no justification for his interim order being vacated only because 180/365 days have elapsed. Any other interpretation jeopardising the rights of such an assessee would in our opinion be per se arbitrary. It is settled law that the assessee cannot be permitted to suffer for the wrong of the Court/Tribunal nor the taxing authorities can be permitted to take benefit of the wrong committed by the Court/Tribunal. - An act can either be an act of omission or be an act of commission. The non-disposal of an appeal, if not due to the fault of any of the parties, but due to the heavy work with the Tribunal, would fall under the category of act of omission . No law can be so unfair as to say that if the Court/Tribunal is at fault, the parties shall suffer. No case law is required to support the proposition that an act of Court/Tribunal shall not prejudice a party. - Decided against Revenue.

Summary

Issues Involved:
1. Extension of interim stay orders beyond 365 days under Section 35-C (2A) of the Central Excise Act, 1944.
2. Extension of interim stay orders beyond 365 days under Section 254 (2A) of the Income Tax Act, 1961.
3. The power of the Tribunal to extend interim orders when the appeal is not disposed of within the statutory period despite the assessee's cooperation.

Detailed Analysis:

Issue 1: Extension of Interim Stay Orders Beyond 365 Days Under Section 35-C (2A) of the Central Excise Act, 1944
The High Court addressed the issue of whether the Tribunal has the power to extend interim stay orders beyond the statutory period of 365 days as prescribed under Section 35-C (2A) of the Central Excise Act, 1944. The Tribunal had previously held that an extension could be granted if the delay in disposing of the appeal was not attributable to the assessee and the Tribunal was satisfied with the assessee's cooperation. The Court noted that the statutory provision mandates the disposal of appeals within 365 days, failing which the stay order stands vacated. However, the Court emphasized that if the delay is not due to the assessee's fault, it would be unfair and discriminatory to make the assessee suffer. The Court concluded that the assessee should be allowed to file a fresh stay application if the earlier stay order expires due to the 365-day limit.

Issue 2: Extension of Interim Stay Orders Beyond 365 Days Under Section 254 (2A) of the Income Tax Act, 1961
Similarly, the Court examined the provisions under Section 254 (2A) of the Income Tax Act, 1961, which also stipulates that interim stay orders shall stand vacated if the appeal is not disposed of within 365 days. The Court reiterated its stance that the assessee should not suffer due to the Tribunal's inability to dispose of the appeal within the prescribed period if the delay is not attributable to the assessee. The Court upheld the Tribunal's decision to allow the filing of fresh stay applications in such cases.

Issue 3: The Power of the Tribunal to Extend Interim Orders When the Appeal is Not Disposed of Within the Statutory Period Despite the Assessee's Cooperation
The Court delved into the broader issue of whether the Tribunal can extend interim orders when the appeal is not disposed of within the statutory period despite the assessee's cooperation. The Court observed that the legislative intent behind the statutory provisions is to ensure timely disposal of appeals. However, it recognized that the Tribunal's heavy workload often makes it impossible to comply with the statutory timelines. The Court highlighted the principle that no one should be prejudiced by an act of the Court (actus curiae neminem gravabit) and held that the assessee should not be penalized for delays beyond their control. The Court affirmed that the Tribunal has the discretion to consider fresh stay applications without prejudice due to the expiration of the initial stay order.

Conclusion:
The High Court dismissed the four excise appeals and disposed of the two writ petitions, providing that assessees could file fresh stay applications before the Tribunal if the initial stay order expires due to the statutory 365-day limit. The Tribunal is directed to consider these applications on their merits, without being influenced by the expiry of the previous stay order. The Court's judgment ensures that assessees are not unfairly penalized for delays in the disposal of appeals that are beyond their control.