2015 (8) TMI 696 - HC - Central Excise

Power of Tribunal to extend stay beyond the period of 365 days - Application of Maruti Suzuki (India) Ltd. 2014 (2) TMI 1037 - DELHI HIGH COURT delivered in case of Income tax on Section 35C(2A) of Central Excise - Held that - 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. Powers of the tribunal u/s 254 (2A) of the IT Act and Powers of the tribunal u/s 35C (2A) of the CE Act regarding extension of stay order are not at par. - Moreover the issue of constitutional validity of Section 254(2A) was not considered in Maruti Suzuki (India) Ltd. 2014 (2) TMI 1037 - DELHI HIGH COURT - This court has struck down the provisions of Section 254(2A) on ground of constitutional validity in the case of PEPSI FOODS PVT. LTD 2015 (5) TMI 655 - DELHI HIGH COURT . - Means thereby, the tribunal has power to grant extension of stay order. Therefore, we are unable to agree with the reasoning of the Division Bench of this Court in Haldiram India Pvt. Ltd. 2015 (7) TMI 720 - DELHI HIGH COURT 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. - Decided in favour of assessee.

Summary

Issues Involved:
1. Power of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to grant or extend stay of recovery of demand beyond 365 days.
2. Comparison of provisions in the Central Excise Act (CE Act) and the Income Tax Act (IT Act) regarding stay orders.
3. Applicability of the decision in Maruti Suzuki (India) Ltd. to cases under the CE Act.
4. Legislative intent behind the amendments made by the Finance Act, 2008.

Detailed Analysis:

1. Power of CESTAT to Grant or Extend Stay Beyond 365 Days:
The primary issue addressed was whether CESTAT has the authority to extend a stay of recovery beyond 365 days from the initial stay order if the delay in disposing of the appeal is not attributable to the assessee. The court examined Section 35C (2A) of the CE Act, which does not contain the restrictive language found in the third proviso to Section 254(2A) of the IT Act, specifically the phrase "even if the delay in disposing of the appeal is not attributable to the assessee."

2. Comparison of Provisions in CE Act and IT Act:
The court compared the text of Section 35C (2A) of the CE Act and Section 254(2A) of the IT Act. The critical difference noted was the absence of the phrase "even if the delay in disposing of the appeal is not attributable to the assessee" in the CE Act. This omission suggests that the bar on extending stay beyond 365 days, present in the IT Act, does not apply to the CE Act.

3. Applicability of Maruti Suzuki (India) Ltd. Decision:
The court reviewed the decision in Maruti Suzuki (India) Ltd., where it was held that the IT Appellate Tribunal could not extend an interim stay order beyond 365 days due to the specific language of the third proviso to Section 254(2A) of the IT Act. However, since the CE Act lacks this specific language, the court concluded that the reasoning in Maruti Suzuki (India) Ltd. does not apply to cases under the CE Act. The court overruled the decision in Haldiram India Pvt. Ltd., which had applied the Maruti Suzuki (India) Ltd. reasoning to the CE Act.

4. Legislative Intent Behind Amendments by Finance Act, 2008:
The court emphasized that the legislative intent behind the amendments made by the Finance Act, 2008, particularly the insertion of the phrase "even if the delay in disposing of the appeal is not attributable to the assessee" in the IT Act, was to ensure that stay orders are not extended indefinitely, thus compelling timely disposal of appeals. This intent was not mirrored in the CE Act, indicating a different legislative approach for customs and excise matters.

Conclusion:
The court concluded that CESTAT retains the power to extend stay orders beyond 365 days under Section 35C (2A) of the CE Act if the delay is not attributable to the assessee. The decision in Maruti Suzuki (India) Ltd. regarding the IT Act does not apply to the CE Act due to the absence of specific restrictive language. The Division Bench's decision in Haldiram India Pvt. Ltd. was overruled, and the reference was answered accordingly. The appeal was scheduled for further consideration.