2013 (8) TMI 709 - AT - Service Tax

Interim Relief Extension of the Order Stay Application effect of proviso introduced into the provision by the Finance Act, 2013. - Held that - The incapacity of the Tribunal to dispose of appeals (where an order of stay was granted) within a period of 180 days (earlier) or 365 days (as at present) was not attributable to any dilatory conduct of the assesses Where the appeal could not be disposed of for no fault of the assesse or for reason not attributable to the assesse, provisions of Section 35C(2A) of the 1944 Act would not be applicable following IPCL Versus COMMISSIONER OF CENTRAL EXCISE, VADODARA 2004 (6) TMI 52 - CESTAT, NEW DELHI . Interpretation of Provision Waiver of Pre-deposit - The interpretation placed by the Supreme Court in Kumar Cotton Mills Pvt. Ltd. 2005 (1) TMI 114 - SUPREME COURT OF INDIA on the 2nd proviso to Section 35C(2A) of 1944 Act was a fortiori applicable to the proviso introduced into the provision by the Finance Act, 2013 - Since the present appeal could not be disposed of within 365 days, for no fault of the assesse, and a prima facie case in favour the assesse was recorded by the earlier order- the assesse should be entitled to waiver of pre-deposit of the assessed demand, during pendency of the appeal Stay granted.

Summary

Issues:
1. Extension of waiver of pre-deposit during the pendency of the appeal.
2. Interpretation of Section 35F of the Central Excise Act, 1944 and Section 83 of the Finance Act, 1994 regarding undue hardship.
3. Application of Section 35C of the 1944 Act and Section 86(7) of the Finance Act to limit the duration of waiver of pre-deposit.
4. Impact of the 2nd proviso of Section 35C(2A) on the duration of stay orders.
5. Analysis of the amendment to the proviso of Section 35C(2A) and its effect on extending the period of stay.
6. Consideration of judicial decisions regarding the extension of stay orders beyond specified periods.

Detailed Analysis:
1. The petitioner sought an extension of the waiver of pre-deposit granted earlier during the appeal's pendency. The appeal was against a service tax demand confirmed by the adjudicating authority, including interest and penalty. The delay in disposing of the appeal was due to the backlog of cases before the Tribunal.

2. Section 35F of the Central Excise Act, 1944, and Section 83 of the Finance Act, 1994 allow the Tribunal to dispense with the deposit of duty or penalty if it causes undue hardship. The Tribunal must consider a prima facie case, balance of convenience, and irreparable injury before granting a waiver of pre-deposit.

3. The application of Section 35C of the 1944 Act and Section 86(7) of the Finance Act in limiting the duration of waiver of pre-deposit was debated. While the Revenue argued for the applicability of Section 35C(2A) to service tax appeals, the Tribunal considered the procedural aspects specified in the 1944 Act.

4. The 2nd proviso of Section 35C(2A) mandates that if an appeal with a stay order is not disposed of within the specified period, the stay order stands vacated. Judicial precedents highlighted that such provisions should not penalize the assessee for delays beyond their control.

5. An amendment to the proviso of Section 35C(2A) allowed for an extension of the stay period on application, subject to certain conditions. The Revenue contended that this amendment restricted the Tribunal's discretion in extending the stay period.

6. The Tribunal, based on Supreme Court decisions, held that if an appeal could not be disposed of due to reasons not attributable to the assessee, provisions like Section 35C(2A) should not apply. The Tribunal emphasized the need for a purposive interpretation of such provisions considering the challenges in the justice delivery system.

This detailed analysis provides insights into the legal judgment's various issues, interpretations of relevant legal provisions, and the Tribunal's considerations in granting the extension of the waiver of pre-deposit during the appeal's pendency.