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TMI Blog2013 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. The Circular dated 1.1.2013 contemplates that the recovery shall be affected, if stay has not been granted within 30 days (hereinafter referred as 'second set of cases'). 2. In CWP No.844 of 2013 falling in the first set of cases, the petitioner has pointed out that against the Order-in-Original dated 31.05.2007 and 21.08.2007, the appeals were filed before the Commissioner (Appeals), Customs and Central Excise, Chandigarh. The Commissioner (Appeals) upheld the order passed by the Adjudicating Authority on 17.01.2008. The petitioner filed further appeal before the Customs, Excise and Service Tax Appellate Tribunal (for short 'the Tribunal'). The Tribunal waived the deposit of duty and penalty as well as recovery subject to deposit of Rs.5 lacs vide order dated 19.05.2008. Since the appeal could not be heard within the prescribed period of one hundred and eighty days for no fault on the part of the petitioner, therefore, in terms of the Supreme Court decision in Commissioner of Customs and Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd. 2005 (180) ELT 434, the Tribunal ordered the interim stay to continue till further orders on 03.03.2009. In spite of such order, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in IPCL vs. Commissioner of Central Excise, Vadodara 2004 (169) ELT 267, wherein the Tribunal observed that the inherent jurisdiction of the Tribunal to grant interim relief so as to make the ultimate relief effective cannot be curtailed indirectly by sub-section (2A) of the Act. The Bench observed as under:- "6. The observation of the Bench that if the Tribunal grants further extension of stay beyond the period of 180 days the amendment would become redundant is also not justified. A similar contention raised in regard to sub-section (2A) of Section 254 of the Income Tax Act was not accepted by the Income Tax Appellate Tribunal in Centre for Women's Development Studies vs. Deputy Director of Income Tax 2002 (257) ITR 60. The inherent jurisdiction of the Tribunal to grant interim relief so as to make the ultimate relief effective cannot be curtailed indirectly by subsection (2A). At the end of the period of 180 days when the appellant makes an application for extension of the stay the Tribunal can always consider whether there is any change in the circumstances which would justify extension or modification of the stay. The Revenue gets an opportunity to brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, as above, we send back the Miscellaneous Application for hearing by the appropriate Bench." 5. In CWP No.1606 of 2013 falling in the second set of cases, the Adjudicating Authority passed an order on 20.04.2002 raising demand of Cenvat credit of Rs.1,46,01,332/-. The petitioner filed an appeal before the Tribunal along with an application for waiver of pre-deposit, which is now pending for 07.03.2013. Such application was listed on 30.07.2012, 06.11.2012, 14.11.2012 and 30.11.2012. The Board has issued a Circular dated 01.01.2013 instructing the Administrative Officers to initiate recovery proceedings in the matters which are pending before the Appellate Authorities after filing of an appeal. Thereafter, a notice was served upon the petitioner on 15.01.2013. Feeling aggrieved, the petitioner challenged the Circular dated 01.01.2013 and notice dated 15.01.2013 before this Court. 6. It is argued that the assessee has no control over the decision of appeals either by the Commissioner (Appeals) or by the Tribunal, as final hearing and the decision thereon is dependent upon numerous factors on which the assessee has no control whatsoever. Non constitution of Tribunal; the lack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.01.2013, even when an application for waiver of pre-deposit is pending before the Appellate Authorities for the reason that on such application for stay or waiver of pre deposit, no orders have been passed? (2) Whether the second proviso in sub-section (2A) of Section35C is directory and that the Tribunal in appropriate circumstances can extend the period of stay beyond 180 days? 9. At this stage, the relevant provisions of the Act as well as the Circular dated 01.01.2003 need to be extracted. The same are as under:- Central Excise Act, 1944 "35A. Procedure in appeal:- (1) The Commissioner (Appeals) shall give an opportunity to the appellant to be heard, if he so desires. (2) The Commissioner (Appeals) may, at the hearing of an appeal, allow an appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission off that ground from the grounds of appeal was not willful or unreasonable. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing." Circular dated 01.01.2003 "xxx xxx (2) Henceforth, recovery proceedings shall be initiated against a confirmed demand in terms of the following order: Sr. No. Appellate Authority Situation Directions regarding recovery xx xx xx 3. Commissioner (Appeals) Appeal filed with a stay application against an order-in-original Recovery to be initiated 30 days after the filing of appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. It was held that in truth such provisions whittles down the right itself and cannot be regarded as a mere rule of procedure. It was held to the following effect:- "10. The learned Advocate urges that the requirement as to the deposit of the amount of the assessed costs does not affect the right of appeal itself which still remains intact, but only introduces a new matter of procedure. He contends that this case is quite different from the case of Sardar Ali V. Dolimuddin (E) AIR 1928 Cal. 640, for in this case it is entirely in the power of the appellant to deposit the tax if he chooses to do so whereas it was not within the power of the appellant in that case to secure a certificate from the learned Single Judge who disposed of the second appeal. In the first place the onerous condition may in a given case prevent the exercise of the right of appeal, for the assessee may not be in a position to find the necessary money in time. Further this argument cannot prevail in view of the decision of the Calcutta High Court in Nagendra Nath vs. Mon Mohan Singha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance the right of appeal, which is conferred upon a person who is aggrieved with the demand of tax made from him, and the right of the Corporation to speedy recovery of the tax. The impugned provision accordingly confers a right of appeal and at the same time prevents the delay in the payment of tax. xxx xxx The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal. We fail to understand as to why the legislature while granting the right of appeal cannot impose conditions for the exercise of such right. In the absence of any special reasons there appears to be no legal or constitutional impediment to the imposition of such conditions. It is permissible, for example, to prescribe a condition in criminal cases that unless a convicted person is released on bail, he must surrender to custody before his appeal against the sentence of imprisonment would be entertained. Likewise, it is permissible that no appeal shall lie against an order relating to an assessment of tax unless the tax had been paid. Such a provision was on the statute book in Section 30 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who is ultimately found to be in unlawful possession of the land; thirdly, the deposit or the guarantee is correlated to the land holdings tax (30 times the tax) which, we are informed, varies in the State of Haryana around a paltry amount of Rs.8 per acre annually; fourthly, the deposit to be made or bank guarantee to be furnished is confined to the land holdings tax payable in respect of the disputed area i.e. the area or part thereof which is declared surplus after leaving the permissible area to the appellant or petitioner. Having regard to those aspects, particularly the meager rate of the annual land tax payable, the fetter imposed on the right of appeal/revision, even in the absence of a provision conferring discretion on the appellate/revisional authority to relax or waive the condition, cannot be regarded as onerous or unreasonable. The challenge to Section 18(7) must, therefore, fail." It was on the facts of the aforesaid case, the legality of the provision was upheld, and the condition of filing appeal was not negated as not being unreasonable and onerous. 18. In Vijay Prakash D. Mehta and Jawahar D. Mehta case (supra), while examining the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) examined the laws relating to Sales Tax Act in the States of Punjab and Haryana and condition of pre-deposit of the amount of tax. The Bench has inter alia held that appeal is a creation of statute and in case person wants to avail the right of appeal, he has to accept the conditions imposed by the Statute and the legislature could impose condition for exercise of such a right. Therefore, neither there is constitutional nor legal impediment for imposition of such a condition. 21. In Mardia Chemicals Ltd. and others vs. Union of India and others (2004) 4 SCC 311, wherein the condition of pre-deposit in respect of remedy under Section 17 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was found to be bad rendering the remedy illusory. The Court observed as under:- "61. In the case of Seth Nandlal (supra), while considering the question of validity of pre-deposit before availing the right of appeal the Court held:- "....right of appeal is a creature of the statute and while granting the right the legislature can impose conditions for the exercise of such right so lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 SC 912, wherein it was quoted that: "The question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained, not only from the phraseology of the provision"; but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other..........."; 25. In Banwarilal Agarwalla vs. State of Bihar AIR 1961 SC 849, a Constitution Bench of the Supreme Court held that no general rule can be laid down for deciding whether any particular provision in a statute is mandatory, meaning thereby that non-observance thereof involves the consequence of invalidity or only directory, i.e., a direction the nonobservance of which does not entail the consequence of invalidity, whatever other consequences may occur. But, in each case, the court has to decide the legislative intent. The courts have to consider not only the actual words used but the scheme of the statute, the intended benefit to public of what is enjoined by the provisions and the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the State Commission constituted under the Consumer Protection Act, 1986 has no power to accept a reply filed beyond a total period of 45 days. It was held that such provision is not mandatory in nature. No penal consequences are prescribed and the period of extension of time 'not exceeding 15 days', does not prescribe any kind of period of limitation. The provision is directory in nature. The provision is more by way of procedure to achieve the object of speedy disposal of such disputes. It is an expression of desirability in strong terms. But it falls short of creating any kind of substantive right in favour of the complainant reason of which the respondent may be debarred from placing his version in defence in any circumstances whatsoever. 30. In P.T.Rajan vs. T.P.M. Sahir (2003) 8 SCC 498, the Supreme Court held that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory and not mandatory. It was held to the following effect:- "45. A statute as is well known must be read in the text and context thereof. Whether a statute is directory or mandatory would not be dependent on the user o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 401)." 31. Recently in Delhi Airtech Services Private Limited and another vs. State of Uttar Pradesh and another (2011) 9 SCC 354, the Supreme Court held to the following effect:- "117. In Principles of Statutory Interpretation, 12th Edn., 2010, Justice G.P. Singh, at pp. 389-92 states as follows:- "......... As approved by the Supreme Court:- 'The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other.' 'For ascertaining the real intention of the legislature', points out Subbarao, J., 'the court may consider inter alia, the nature and design of the statute, and the consequences which would follow fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as merely directory, the neglect of them involving nothing more than liability to a penalty, if any were imposed, for breach of the enactment. 'An absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially'. It is impossible to lay down any general rule for determining whether a provision is imperative or directory. 'No universal rule,' said Lord Campbell, L.C. 'can be laid down for the construction of statutes, as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of Justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.' and Lord Penzance said:- 'I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subjectmatter; consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directory but if it confers private rights it is mandatory. Relevant passage from this judgment is quoted below: (AIR p. 185, para 7) '7. ......... It is well settled that generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice of the courts to hold such provisions to be directory only, the neglect of them not affecting the validity of the acts done.' 17. A Constitution Bench of this Court in State of U.P. v. Babu Ram Upadhya AIR 1961 SC 751 decided the issue observing: (AIR p. 765, para 29) '29. ......... For ascertaining the real intention of the legislature the court ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory or as directory, accordingly. Equally, it is settled law that when a statute is passed for the purpose of enabling the doing of something and prescribes the formalities which are to be attended for the purpose, those prescribed formalities which are essential to the validity of such thing, would be mandatory. However, if by holding them to be mandatory, serious general inconvenience is caused to innocent persons or general public, without very much furthering the object of the Act, the same would be construed as directory.' xxx xxx xxx 129. Statutes which encroach upon rights, whether as regards person or property, are subject to strict construction in the same way as penal Acts. It is a recognised rule that they should be interpreted, if possible, so as to respect such rights and if there is any ambiguity, the construction which is in favour of the freedom of the individual should be adopted. (See Maxwell on The Interpretation of Statutes, 12th Edn. by P. St. J. Langan.) xx xx xx 131. If I analyse the above principles and the various judgments of this Court, it is clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. This view of ours finds support from the principle stated in Halsbury's Laws of England in the following words:- "If public officials or a public body fail to perform any public duty with which they have been charged, an order of mandamus will lie to compel them to carry it out, even though the time prescribed by statute for the performance of the duty may have passed." In view of the above discussion, we hold that failure of the Tribunal to decide an application made under Section 254(2) of the Act within 4 years did not denude it of the jurisdiction to decide the application on merits." 33. A Division Bench of this Court in a judgment reported as Stelco Strips Ltd. vs. State of Punjab and others (2009) 19 VST 498 (PandH) in which one of us (Hemant Gupta, J.) was a Member examined the provisions of Section 14B(7)(ii) and (iiii) of Punjab General Sales Tax Act, 1948 providing that the proceedings shall be decided within a period of 14 days. The Court held that such provision is more by way of procedure to achieve the object of speedy disposal of the disputes. It is an expression of desirability in strong terms. It was held to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) is empowered to dispense with the requirement of deposit of duty demanded and penalty levied, if it is satisfied that such levy would cause undue hardship. The provision further contemplates that the Commissioner (Appeals) is to decide such application within 30 days. The effect of the Circular is if such application is not decided within 30 days by the Commissioner (Appeals), the recovery proceedings can be initiated against the assessee. 38. We find that the provision contemplating that the Commissioner (Appeals) should decide application within 30 days is directory. Such intention is evident from the fact that it contemplates that Commissioner (Appeals) shall "where it is possible to do so";, decide application to dispense with the requirement of deposit of duty demanded and penalty levied within 30 days. The assessee in no way can insure that the Commissioner (Appeals) shall decide his application for dispensation of the duty demanded and penalty levied within a period of 30 days. Therefore, for no fault on the part of the assessee, even if the appeal has been presented within the period of limitation along with an application for waiver of condition of pre-deposit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals), a quasi judicial Tribunal, has a jurisdiction to waive the condition of pre-deposit of duty demanded and penalty levied, but such judicial discretion vested in the Authority under the Act cannot be interfered with in any manner administratively. 40. Since the Statute confers a right of appeal on the assessee and also right to make an application to dispense with deposit of the duty demanded and penalty levied in the manner which the Appellate Authority deems appropriate. Therefore, unless such jurisdiction is exercised by the Appellate Authority either way i.e. to grant benefit of waiver or impose such conditions as it may consider appropriate, the Board cannot direct the Administrative Officers to recover the demand raised against the assessee. The statutory right of appeal or of consideration of an application for predeposit cannot be frustrated administratively. 41. In terms of a judgment of May George's case (supra) as referred to and followed in Delhi Airtech Services Private Limited's case (supra), the provision of a Statute creating public duties are directory, whereas those conferring private rights are imperative. 42. In a judgment reported as Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be a condition precedent which would disable it from obtaining the benefit therefrom for all times to come." 43. Thus, an aggrieved party such as an assessee could only file appeal along with an application for waiver of the pre-deposit. It is, thereafter, for the public functionary i.e. Commissioner (Appeals) or the Tribunal to pass an order on such appeal and/or application. The decision on appeal and on application is not within the power and control of the assessee, but depends upon the acts of public functionary. The provisions of a Statute relate to performance of a public duty. The failure of the Appellate Authority to decide appeal and/or application would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty. In view of the said principle, we find that the Commissioner (Appeals) is discharging a public duty and that failure to decide an application for waiver of deposit would lead to serious injustice to the assessee, who has no control over the Commissioner (Appeals), who is entrusted with the duty to decide such application. Therefore, such provision is only directory. 44. The Circular is purportedly is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner (Appeals) or, as the case may be, the CESTAT are unable to decide the application for stay within a period of thirty days of the filing of the appeal, it would be completely arbitrary to take recourse to coercive proceedings for the recovery of the demand until the application for stay is disposed of. Administrative reasons including the lack of adequate infrastructure, the unavailability of the officer concerned before whom the stay application has been filed, the absence of a Bench before the CESTAT for the decision of an application for stay or the sheer volume of work are some of the causes due to which applications for stay remain pending. In such a situation, where an assessee has done everything within his control by moving an application for stay and which remains pending because of the inability of the Commissioner (Appeals) or the CESTAT to dispose of the application within thirty days, it would, to our mind, be a travesty of justice if recovery proceedings are allowed to be initiated in the meantime. The protection of the revenue has to be necessarily balanced with fairness to the assessee. That was why, even though a specific statutory provision came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Such direction to the Administrative Officers to recover the amount pending consideration of application of waiver of pre-deposit is not justified and, thus, not enforceable in law. 48. Coming to the appeals filed or pending before the Tribunal, the right to appeal before the Tribunal is conferred under Section 35B of the Act. The Appellate Tribunal passes an order in terms of Section 35C of the Act. Sub-section (2A) contemplates that the Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed. The second proviso inserted contemplates that if an order of stay is made in any proceedings relating to an appeal filed under sub-section (1) of Section 35B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order. The further proviso is if an appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. 49. The Bombay High Court in Nedumparambil P. George vs. Union of India 2009 (242) ELT 523, where stay has been granted by the Tribunal, but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manded and penalty levied is made out, is compelled to pay the duty demanded and penalty levied, if the appeal is not decided within 180 days. The assessee has no control in respect of matters pending before the Tribunal; in the matter of availability of infrastructure; the members of the Tribunal and the workload. Therefore, for the reason that the Tribunal is not able to decide appeal within 180 days, the vacation of stay is a harsh and onerous and unreasonable condition. The condition of vacation of stay for the inability of the Tribunal to decide the appeal is burdening the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum is sought to be annulled for no fault of assessee. Therefore, in terms of judgments in Anant Mills Ltd. and Seth Nandlal cases (supra), such condition of automatic vacation of stay on the expiry of 180 days, has to be read down to mean that after 180 days the Revenue has a right to bring to the notice of the Tribunal the conduct of the assessee in delay or avoiding the decision of appeal, so as to warrant an order of vacation of stay. If the provision is not read down in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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