Any Stay Order passed by the Tribunal, if is in force beyond August 7, 2014, shall continue till disposal of appeals – No need for filing application for extension

[Bimal jain]

Dear Professional Colleague,

Any Stay Order passed by the Tribunal, if is in force beyond August 7, 2014, shall continue till disposal of appeals – No need for filing application for extension

We are sharing with you an important judgement of the Hon’ble CESTAT, Ahmedabad, in the case of Venketeshwara Filaments Pvt. Ltd. and Others Vs. Commissioner of Central Excise and Service Tax, Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD] on following issue:

Issue:

After omission of 1^st, 2^nd and 3^rdprovisos to Section 35C(2A) of the Central Excise Act, 1944 by the Finance Act, 2014, is there any requirement to file an application for extension of Stay Order passed by the Tribunal which is in force beyond August 7, 2014?

Facts and background:

Venketeshwara Filaments Pvt. Ltd. and Others (“the Appellants”) were granted Stay by the Hon’ble CESTAT, Ahmedabad which was subsequently extended. That Stay was to coming to an end on August 21, 2014.

Fearing that the Department may initiate coercive action, the Appellants as a precautionary measure, filed applications before the Hon’ble CESTAT, Ahmedabad seeking further Stay in the matter.

The Appellants submitted that since the 1^st, 2^nd and 3^rdprovisos to Section 35C(2A) of the Central Excise Act, 1944 (“the Excise Act”) were omitted by the Finance Act, 2014, the position as on date is that there is no requirement for extension of initial Stay granted and subsequent extensions. It was further submitted that no saving clause is enacted in Section 35C (2A) of the Excise Act and hence once the provisos are omitted nothing survives.

On the other hand, the Revenue submitted that it cannot be the intention and reading of the legislation as initially when the Stay was granted and extended, there was a statutory period of 180 days applicable in the cases where the Stay was initially granted.

Held:

The Hon’ble CESTAT, Ahmedabad after considering the submissions of both the parties and extracting the provisions of Section 35C (2A) of the Excise Act, as they existed before the omission of the provisos by the Finance Act, 2014, initially observed as under:

· The omissions of 1^st, 2^nd and 3^rd proviso to Section 35C(2A) of the Excise Act now has to be read to the effect that there is no provision for making any further applications for extension of Stay nor Tribunal has powers for hearing and disposing the applications for extension of Stay from August 7, 2014. In the absence of any provisions for hearing and disposing applications for extension of Stay, the applications made by the Appellants herein have to be disposed of as such;

· At the same time, it would also mean that after initial granting of Stay by the Tribunal, Order does not get lapsed. Omission of 1^st, 2^nd and 3^rd proviso would mean that the appeal filed by an assessee needs to be disposed of within a period of 3 years is only the requirement and Stay Orders which has been passed by the Tribunal under the powers mandated by Section 35C of the Excise Act would remain in force.

Therefore, after noting the aforesaid views are fortified by the judgment of the Hon’ble High Court of Gujarat in the case of KRISHNA PROCESSORS Versus UNION OF INDIA - 2012 (11) TMI 954 - GUJARAT HIGH COURT wherein reliance was placed on the Apex Court decision in KOLHAPUR CANESUGAR WORKS LTD. Versus UNION OF INDIA [2000 (2) TMI 823 - Supreme Court of India] the Hon’ble Tribunal concluded that any Stay Order passed by the Tribunal, if it is in force beyond August 7, 2014, it would continue till the disposal of the appeals and there is no need for filing any further applications for extension of orders granting Stay either fully or partially.

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Thanks and Best Regards,

Bimal Jain

FCA, FCS, LLB, B.Com (Hons)

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