2008 (7) TMI 74 - HC - Central Excise

Petitioner is praying for interim relief, thus, seeks stay of the operation of the notifications imposing production based duty on notified goods (Pan masala & gutkha) appellant seek stopping the recovery of tax - merely because the validity of the legislation is challenged, the operation of that legislation cannot be stayed appellant has not proved that if stay is not granted he will suffer any injury since there is no any exceptional circumstances, interim relief cannot be granted

Summary

Issues:
Interim relief sought by the Petitioner to stay the operation of specific notifications issued under Section 3(a) of the Central Excise Act.

Analysis:
The petitioners sought interim relief to stay the operation of certain notifications issued under Section 3(a) of the Central Excise Act. The Court noted that granting such relief would render Section 3(a) of the Act, inserted by the Finance Act, 2008, inoperative. Citing the Supreme Court judgment in Siliguri Municipality case, the Court emphasized the need to balance the presumption of legislation's validity and the potential harm of staying its operation. The Court highlighted that the burden was on the Petitioner to demonstrate irreparable injury or imbalance of convenience, which was not adequately shown in the present case.

The Court further referenced the Supreme Court's stance that stays on tax recovery should be exceptions rather than rules, granted only under exceptional circumstances. Despite the Petitioner's request to halt tax recovery under Section 3(a) of the Central Excise Act, the Court found no extraordinary circumstances warranting such relief. In line with the principle of making a workable arrangement, the Court determined that no interim order could be issued in favor of the Petitioner. Instead, the Court directed that any tax recovery from the Petitioner under Section 3(a) would be subject to the petition's outcome, and the Petitioner's tax payment would not prejudice their rights and contentions in the ongoing case.

In conclusion, the Court denied the interim relief sought by the Petitioner to stay the operation of notifications under Section 3(a) of the Central Excise Act, emphasizing the need to balance the presumption of legislation's validity and the absence of demonstrated irreparable harm or imbalance of convenience. The Court opted to allow tax recovery from the Petitioner under Section 3(a) with the condition that the payment would not affect their rights and contentions in the ongoing petition.