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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 ..... 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. In the present case, the Appellate Authority has a power to waive or reduce the amount of pre-deposit, but such power is sought to be taken away only if the Commissioner (Appeals) is not able to decide the application for stay within 30 days. Such a condition is relevant and meaningful, if the Central Government is in a position to ensure that all appeals and/or the applications for dispensation of duty demanded and penalty levied can be decided within a period of 30 days. If the Central Government has no power to control the working of the Appellate The Circular is purportedly issued in terms of judgment in Krishna Sales (P) Ltd. case (1993 (9) TMI 124 - SUPREME COURT OF INDIA). The said judgment lays down that mere filing of an appeal does not operate as stay or suspension of the order appealed against. But the Board over-looked the fact that the assessee is not seeking stay only on account of filing of an appeal, but for the reason that the assessee has sought dispensing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 and Seth Nandlal cases (1980 (5) TMI 101 - SUPREME COURT), 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 the manner mentioned above, such condition suffers from illegality rendering the right of appeal as redundant. - CWP No. 877 of 2013 - - - Dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed the Department that the Tribunal has granted stay and the same was extended till further orders. However, the Department again directed the petitioner to deposit the dues vide letter dated 17.12.2012 (Annexure P-10), which led to invocation of the jurisdiction of this Court. 3. Mr. Jagmohan Bansal, learned counsel for the petitioner argued that the second proviso incorporating provisions of automatic vacation of stay is onerous and makes the remedy of appeal illusory and nugatory, as on the expiry of one hundred and eighty days of the stay, the stay is automatically deemed to be vacated, even if the assessee is not in fault in any manner. It is argued that the right of appeal has to be meaningful and cannot be a farce, when without any fault of the assessee, the stay is vacated. The petitioner had made out case for waiver of condition of pre-deposit, but still on the basis of administrative circular, the recovery is sought to be initiated. Learned counsel relies upon an order passed by the Supreme Court in Kumar Cotton Mills Pvt. Ltd. case (supra), wherein the Court observed to the following effect:- "6. The sub-section which was introduced in terrorem cannot be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is practically not possible to dispose of the appeals pending before the Bombay Bench of the Tribunal within 180 days. The Bench has also suggested some remedy for the problem. In this connection, we may observe that similar situation can arise in other Benches also where an appeal posted within 180 days could not be taken up for different reasons. It may be due to non-availability of time for the Bench or due to non-availability of the Bench itself. Unless the Tribunal has the power to extend stay beyond 180 days, the assessee's interest will be in jeopardy for no fault of his. Even the order granting exemption from pre-deposit will be rendered nugatory as the assessee will be compelled to satisfy the demand during pendency of the appeal. It has been always the judicial view that no party should be prejudiced due to action or inaction on the part of the court (Rajkumar Dey and others vs. Tarapada Dey, 1987 (4) SCC 398). 13. On going through the decision rendered by a bench of two members in Kumar Cotton Mills Ltd. we find that the Bench taking into consideration the importance of this issue permitted Advocates and Consultants not representing the applicants also to make subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) to decide the appeals in a particular time-frame. Since the Statute has conferred a right of appeal, the said right has to be substantive and meaningful and cannot be taken away by imposing onerous, unjustified conditions on which assessee has no control. Once the Revenue is permitted to recover the amount, it seriously prejudices the right of appeal of an aggrieved person. Such recovery of the amount though an appeal is pending at the instance of the assessee is pre-judging the issue depriving the assessee of fair opportunity of hearing and decision by the Appellate Authorities. 7. On the other hand, learned counsel for the Revenue has pointed out that the Legislature has imposed condition in respect of cessation of interim order after the expiry of one hundred and eighty days. It is contended that the Commissioner (Appeals) as well as the Tribunal are not the Authorities under the Central Government and, therefore, the Central Government cannot ensure that the appeals are decided in a particular timeframe. Therefore, to protect the interest of the Revenue, the Legislature has decided for automatic cessation of stay. The right of appeal is creation of Statute and that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .05.2001) xx xx" "35C. Orders of Appellate Tribunal - xx xx (2A) The Appellate 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; Provided that where an order of stay is made in any proceeding relating to an appeal filed under sub-section (1) of Section 25B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order; Provided further that if such 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. (proviso inserted by Section 140 of the Finance Act, 2002 w.e.f. 11.05.2002) xx xx" "35F. Deposit, pending appeal, of duty demanded or penalty levied:- Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise Authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal and conditions for entreating the appeal, need to be mentioned, before we examine the issues raised in the present writ petitions. 11. The right of appeal is a creation of a statute. It is not in doubt. Such right of appeal can be circumscribed by the conditions imposed by the Legislature as well. Such concept has been examined in relation to Sale Tax Laws by the Supreme Court and a Full Bench of this Court in M/s Lakshmiratan Engineering Works Ltd. vs. Asstt. Commissioner (Judicial)-I, Sales Tax, Kanpur Range, Kanpur and another AIR 1968 SC 488 and M/s Emerald International Ltd. vs. The State of Punjab (1997) 2 PLR 797 respectively; in relation to the right of appeal under the Municipal Laws by Constitution Bench in The Anant Mills Co. Ltd. vs. The Municipal Corporation of the City of Ahmedabad and others AIR 1975 SC 1234 and Shyam Kishore and others vs. Municipal Corporation of Delhi and another AIR 1992 SC 2279; in relation to Haryana Ceiling on Land Holdings Act, 1972 in Nand Lal and another vs. State of Haryana and others AIR 1980 SC 2097 and under the Central Excise Act, 1944 and/or Customs Act, 1962 in Collector of Customs and Excise, Cochin and others vs. M/s A.S.Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be dispensed with if it causes undue hardship. 14. In M/s Lakshmiratan Engineering Works Ltd. case (supra), it was observed that an appeal could be entertained only if it is accompanied by satisfactory proof of the payment of the tax. It was held that the rules of procedure are intended to advance justice and not to defeat it. The right of appeal has been made subservient to the payment of the admitted tax. 15. The Constitution Bench in Anant Mills Co. Ltd. case (supra) examined Section 406(2)(e) of the Bombay Provincial Municipal Corporation Act, 1949 contemplating that no appeal shall be entertained unless the amount claimed from the appellant has been deposited with the Commissioner. The Bench observed that such condition does not affect the right of appeal and at the same time prevents the delay in payment of tax. The Bench held to the following effect: "40. .........The requirement about the deposit of the amount claimed as a condition precedent to the entertainment of an appeal which seeks to challenge the imposition or the quantum of that tax, in our opinion, has not the effect of nullifying the right of appeal, especially when we keep in view the fact that di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a superior court and invoking its aid and interposition to redress the error of the court below. The Court also held that the procedure is within the Court's power, but where it pares down pre-judicially the very right, carving the kernel out, it violates the provision creating the right. It observed as under: "43. of course, procedure is within the Court's power, but where it pares down pre-judicially the very right, carving the kernel out, it violates the provision creating the right. Appeal is a remedial right and if the remedy is reduced to a husk by procedural excess, the right became a casualty. That cannot be." 17. In Nand Lal's case (supra), it was argued that if the conditions imposed are unreasonably onerous when no discretion has been left with the appellate or revisional authority to relax or waive the condition or grant exemption in thereof in fit and proper cases, therefore, the fetter imposed must be regarded as unconstitutional and struck down. The Court rejected the contention, but observed as under: "19. ...........In the first place, the object of imposing the condition is obviously to prevent frivolous appeals and revision that impede the implementat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the cases and all the relevant factors, namely, the probability of the prima facie case of the appellant, the conduct of the parties, have been taken into consideration by the Tribunal. The purpose of the Section is to act in terrorem to make the people comply with the provisions of law." 19. In Shyam Kishore's case (supra), the Court observed that sometimes to compel the assessee to pay up the demanded tax for several years in succession might very well cripple him altogether. The Court found that there is no reason to construe the provision so rigidly as to disable him from availing his right of appeal. It was held that incidental and ancillary powers of the Appellate Authority should not be curtailed except to the extent specifically precluded by the statute. It observed as under: "41. ...........Though it will not be expedient or proper to encourage adjournment of an appeal, where it is ripe for hearing otherwise, only on this ground and as a matter of course, an interpretation which leaves some room for the exercise of a judicial discretion in this regard, where the equities of the case deserve it, may not be inappropriate. The appellate judge's incidental a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve Judges' Bench of this Court in Ranjit Singh vs. State of Haryana 2012 (2) RCR (Civil) 353, examining the condition of pre-deposit in availing right of appeal under the Punjab Village Common Lands (Regulation) Act, 1961, held that while a right of appeal is a pure and simple statutory right yet once such a right has been conferred its applicability cannot be rendered illusory. It was held to the following effect: "21. On a conspectus of the decisions, relied upon by the learned counsel on both sides, it can be concluded that while a right of appeal is a pure and simple statutory right yet once such a right has been conferred its applicability cannot be rendered illusory. .........."; 23. In the light of the precedents mentioned above, the provisions of the Statute and Circular are required to be examined, as to when a provision of a Statute is to be treated as mandatory or directory. It is wellsettled that the use of expression 'shall' or 'may' is not determinative of the fact whether the provision is directory or mandatory. There is no general rule in respect of as to when a provision is to be treated as directory or mandatory, but in every case the object of Statute must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of provision for consequence in case of non-compliance with the requirements prescribed would indicate directory nature despite use of word 'shall'. In State of Jharkhand vs. Ambay Cements (2005) 1 SCC 368, it was ruled that whenever the statute prescribes that a particular Act is to be done in a particular manner and also lays down that failure to comply with the said requirement would lead to severe consequences, such requirement would be mandatory. 28. In Union of India vs. R.S.Saini, (1991) Supp. 2 SCC 151, the Supreme Court held that the office memorandum fixing the time-limit for completion of disciplinary proceedings is only a guideline and noncompliance of such office memorandum will not invalidate the order of punishment. The office memorandum cannot be construed as imposing a rigid time-limit for the imposition of the order of punishment. In Remington Rand of India Ltd. vs. Workmen AIR 1968 SC 224, non-publication of award under the Industrial Disputes Act, 1947, within the period of thirty days would not render the award invalid. Non-publication of award within a period of 30 days does not entail any penalty and, therefore, the provision as to time in section 17(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way be prejudiced only because the revised electoral roll in form 16 is published a few hours later. The result of filing of such nomination would become known to the parties concerned also after 3.00 p.m. 48. Furthermore, even if the statute specifies a time for publication of the electoral roll, the same by itself could not have been held to be mandatory. Such a provision would be directory in nature. It is a well-settled principle of law 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. (See Shiveshwar Prasad Sinha vs. District Magistrate of Monghyr AIR (1966) Patna 144, Nomita Chowdhury vs. State of West Bengal (1999) 2 Cal. LJ 21 and Garbari Union Coop. Agricultural Credit Society Ltd. vs. Swapan Kumar Jana (1997) 1 CHN 189). 49. Furthermore, a provision in a statute which is procedural in nature although employs the word 'shall' may not be held to be mandatory if thereby no prejudice is caused (See Raza Buland Sugar Co. Ltd. vs. Municipal Board, Rampur, AIR 1965 SC 895, State Bank of Patiala vs. S.K.Sharma (1996) 3 SCC 364, Venkataswamappa vs. Special Deputy C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndatory requirement, 'may' a directory requirement and 'shall' a mandatory requirement."; 118. Maxwell, in Chapter 13 of his 12th Edn. of The Interpretation of Statutes, used the word "imperative"; as synonymous with "mandatory"; and drew a distinction between imperative and directory enactments, at pp. 314-15, as follows:- "Passing from the interpretation of the language of statutes, it remains to consider what intentions are to be attributed to the legislature on questions necessarily arising out of its enactments and on which it has remained silent. The first such question is: when a statute requires that something shall be done, or done in a particular manner or form, without expressly declaring what shall be the consequence of noncompliance, is the requirement to be regarded as imperative (or mandatory) or forms prescribed by the statute have been regarded as essential to the act or thing regulated by it, and their omission has been held fatal to its validity. In others, such prescriptions have been considered 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;, respectively would ordinarily indicate imperative or directory character, but not always. (g) The test to be applied is whether non-compliance with the provision would render the entire proceedings invalid or not. (h) The court has to give due weightage to whether the interpretation intended to be given by the court would further the purpose of law or if this purpose could be defeated by terming it mandatory or otherwise. 120. Reference can be made to the following paragraphs of May George (2010) 13 SCC 98: (SCC pp. 103-05, paras 16-17 and 22-23) "16. In Dattatraya Moreshwar v. State of Bombay AIR 1952 SC 181 this Court observed that law which creates public duties is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature by a careful examination of the whole scope of the statute, the purpose it seeks to serve and the consequences that would flow from the construction to be placed thereon. The word "shall";,therefore, ought to be construed not according to the language with which it is clothed but in the context in which it is used and the purpose it seeks to serve. The meaning has to be ascribed to the word "shall"; as mandatory 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana, (1997) 1 CHN 189 and Pt. Rajan vs. T.P.M. Sahir and others (2003) 8 SCC 498. The language of sub-section (2A), which has been inserted by Finance Act, 1999, makes it clear that the Legislature did not intend to make the time period of 4 years for disposal of the application as mandatory. 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 provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner (Appeals) shall decide such application within 30 days from the date of its filing. 37. Column 4 of the impugned Circular contemplates that if no stay is granted within 30 days, the recovery is to be initiated. The Commissioner (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has no power to control the working of the Appellate Authorities and also to ensure that all appeals are decided within the time frame, such condition is wholly unwarranted. The assessee has also no control over such Authorities. The 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and power of the importer. If it is not within the power and control of the importer and depends upon the acts of other public functionaries, non-compliance of such condition, subject to just exception cannot be held 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 inj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he filing of the appeal, allowing the assessee time to move the Appellate Authority for the disposal of the stay application. The reason why the submission cannot be accepted is because, in a situation where 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 proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted within 30 days, contravenes the right of consideration of appeal and of an application for waiver of pre-deposit conferred under Section 35B read with Section 35F of the Act and is illegal. 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 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of vacation of stay cannot be sustained. 52. The assessee having preferred appeal and that Tribunal being satisfied that condition for dispensing with the pre-deposit of duty demanded 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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