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TMI Blog2016 (1) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGEMENT Ajay Kumar Mittal,J. 1. This order shall dispose of STA Nos. 15, 20 to 22 and 28 of 2015 and CEA Nos.34, 43, 41 and 48 of 2015 as learned counsel for the parties are agreed that the issue involved in all these appeals is identical. However, the facts are being extracted from STA No.15 of 2015. 2. STA No.15 of 2015 has been preferred by the appellant-revenue under section 35G of the Central Excise Act, 1944 (in short, the Act ) read with section 83 of the Finance Act, 1994 against the final order dated 10.12.2014, Annexure A.5 in appeal No. ST 1664/2010, passed by the Customs, Excise and Service Tax appellate Tribunal, New Delhi (in short, the Tribunal ) claiming following substantial question of law:- Whether Hon'ble CESTAT was right in holding that as per the third proviso to Section 35C(2A) of the Central Excise Act, 1944, it has got the power to grant extension of stay beyond 365 days from the initial grant of an order of stay? 3. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The respondent assessee company was engaged in providing business Auxiliary service w.e.f November 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 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. Provided also that where such appeal is not disposed of within the period specified in the first proviso, the Appellate Tribunal may, on an application made in this behalf by a respondent and on being satisfied that the delay in disposing of the appeal is not attributable to such party, extend the period of stay to such further period, as it thinks fit, not exceeding one hundred and eighty-five days, and in case the appeal is not so disposed of within the total period of three hundred and sixty-five days from the date of order referred to in the first proviso, the stay order shall, on the expiry of the said period, stand vacated. 7. It would be expedient to explore the legislative history of the said provision. Section 35C of the Act provides for the orders that may be passed by the Tribunal. It was amended by Section 140 by the Finance Act, 2002 with effect from 11.5.2002 whereby sub section 2A was inserted as under:- (2A) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emains whether the assessee is entitled to interim protection even beyond 365 days where delay in disposal of appeal is not attributable to him . 10. Now with effect from 6.8.2014 by Finance (No.2) Act 2014, all the three provisos in sub section (2A) of Section 35C of the Act have been omitted and the bar which was upon the Tribunal to grant limited stay orders has now been removed even though the mandate to decide the appeal within three years as far as possible still continues to operate. In other words, there is no provision for making any further application for extension of stay. The appeal filed by an assessee needs to be disposed of within a period of three years and stay orders which are passed by the Tribunal would continue to remain in force unless it is limited by the Tribunal itself. 11. The aforesaid provisions have been subject matter of interpretation by various courts. 12. In Salasar Steel and Power Limited vs. Commissioner of C.Ex. Customs, 2015(316) ELT 177 (Chhattisgarh), it was observed by the Chhattisgarh High Court that the statutory provision is itself discretionary in nature and its operation would depend upon the facts and circumstances of each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (2A) of Section 35C of the Act indicates, that if any order of stay was passed by the Tribunal in which case, the appellate tribunal shall dispose of the appeal within 180 days. The second proviso stated that if the appeal was not disposed of within 180 days then the stay order would stand vacated upon the expiry of 180 days. The third proviso, which was added by the Finance Act, 2013, further stipulated that when the appeal was not disposed of within 180 days, the appellate Tribunal, if it was satisfied that the delay in disposal of the appeal was not attributable to the assessee, would extend the period of stay for another 185 days and, if the appeal was not disposed of within a total period of 365 days, the stay would stand vacated upon the expiry of 365 days. 10. Section 35C (2A) of the Act and its three proviso was interpreted by various courts including this Court. 11. In Writ Tax No.375 of 2014, M/s Garg Industries vs.Union of India through Secretary Revenue and two others, decided on 1.7.2014, 2014(307) ELT 432 (All.), a Division Bench of this Court held that the Tribunal in an appropriate case can extend the stay order, but not exceeding 365 days, and that, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b) of sub-section (1) of section 35B, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: Provided that the amount required to be deposited under this section shall not exceed rupees ten crores: Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014. Explanation. For the purposes of this section duty demanded shall include,-- (i) amount determined under section 11D; (ii) amount of erroneous Cenvat credit taken; (iii) amount payable under rule 6 of the Cenvat Credit Rules, 2001 or the Cenvat Credit Rules, 2002 or the Cenvat Credit Rules, 2004. 16. By the aforesaid amendment the power given to the Tribunal to waive or impose a condition on the pre-deposit of duty has now being dispe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self. 14. In Commissioner of Central Excise, Delhi vs. Brew Force Machine Pvt. Limited, 2015 TIOL-1873-HC-DEL-CX-LB, the question before the Full Bench of Delhi High Court was with regard to the power of the Tribunal to grant or extend stay of recovery of demand beyond 365 days from the date when the stay order was initially passed notwithstanding that the delay in disposal of the appeal was not attributable to an assessee. After considering the relevant case law on the point, the answer was given in the affirmative. It was recorded as under:- Thus, it is clear that in Maruti Suzuki (India) Ltd., (2014) 362 ITR 215, the Division Bench was of the opinion that as per the earlier provisions before substitution of the third proviso by Finance Act, 2008, Income Tax Appellate Tribunal had power and authority to extend stay of demand beyond 365 days and the provisions as they then existed were to curtail long delays and ensure expeditious disposal of the appellate proceedings, but without curtailment of power to grant stay beyond 365 days. Reliance was placed on the observations of the Supreme Court in Commissioner of Customs and Central Excise Vs. Kumar Cotton Mills Pvt. Ltd. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bramanian Swamy (supra), [(2014) 8 SCC 682 (SC)] we need to examine whether the present challenge to the validity of the third proviso to Section 254(2A) can be sustained. This is not a case of excessive delegation of powers and, therefore, we need not bother about the second dimension of Article 14 in its application to legislation. We are here concerned with the question of discrimination, based on an impermissible or invalid classification. It is abundantly clear that the power granted to the Tribunal to hear and entertain an appeal and to pass orders would include the ancillary power of the Tribunal to grant a stay. Of course, the exercise of that power can be subjected to certain conditions. In the present case, we find that there are several conditions which have been stipulated. First of all, as per the first proviso to Section 254 (2A), a stay order could be passed for a period not exceeding 180 days and the Tribunal should dispose of the appeal within that period. The second proviso stipulates that in case the appeal is not disposed of within the period of 180 days, if the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot attributable to the assessee by virtue of the Finance Act, 2008, violates the non-discrimination clause of Article 14 of the Constitution of India. The object that appeals should be heard expeditiously and that assesses should not misuse the stay orders granted in their favour by adopting delaying tactics is not at all achieved by the provision as it stands. On the contrary, the clubbing together of well behaved assesses and those who cause delay in the appeal proceedings is itself violative of Article 14 of the Constitution and has no nexus or connection with the object sought to be achieved. The said expression introduced by the Finance Act, 2008 is, therefore, struck down as being violative of Article 14 of the Constitution of India. This would revert us to the position of law as interpreted by the Bombay High Court in Narang Overseas (supra), [(2007) 295 ITR 22 (Bom.)] with which we are in full agreement. Consequently, we hold that, where the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to grant extension of stay beyond 365 days in deserving cases. The writ petitions are allowed as above. 16. The Apex Court in Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Customs Central Excise, Kanpur vs. J.P. Transformers, (2014) 307 ELT 436 (All.), it was held by the Allahabad High Court that the entire object and purpose of insertion of sub section (2A) in Section 35C by Section 140 of the Finance Act 2002 w.e.f 11.5.2002 and the third proviso by Finance Act, 2013 would stand defeated if the waiver of pre-deposit is granted indefinitely. In Garg Industries vs. Union of India, (2014) 307 ELT 432 (All.), it was held by the Allahabad High Court that it was not open to the Tribunal to extend the stay to cover a period exceeding three hundred and sixty five days. This however would not exclude in an appropriate case the power of the High Court under Article 226 of the Constitution of India to pass a protective order provided the court comes to the conclusion that the delay in the disposal of the appeal was not attributable to the conduct of the party which had obtained an order of stay. In view of the consistent opinion of all other High Courts and the observations of the Apex Court as noticed herein above, we are unable to subscribe to the aforesaid approach of the Allahabad High Court and record our dissent. 19. In view of the legal positi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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