C/SCA/5014/2015 CAV JUDGMENT
IN HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 5014 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE S.H.VORA
================================================================
1 Whether Reporters of Local Papers may be allowed
to see judgment ?
2 To be referred to Reporter or not ?
3 Whether their Lordships wish to see fair copy of
judgment ?
4 Whether this case involves substantial question of
law as to interpretation of Constitution of
India or any order made thereunder ?
================================================================
DEPUTY COMMISSIONER INCOME TAX - TDS CIRCLE....Petitioner(s)
Versus
VADOFONE ESSAR GUJARAT LIMITED & 1....Respondent(s)
================================================================
Appearance:
MRS MAUNA M BHATT, ADVOCATE for Petitioner(s) No. 1
MR SN SOPARKAR, SR. COUNSEL with MR SANDEEP SINGHI,
ADVOCATE, MR PARTH CONTRACTOR, ADVOCATE & MR. SIDDHARTH
JOSHI, ADVOCATE for SINGHI & CO, ADVOCATE for Respondent(s) No.
1
================================================================
CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
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HONOURABLE MR.JUSTICE S.H.VORA
Date :12/06/2015
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH)
Rule. Learned advocate Mr. Sandeep Singhi waives
service of rule on behalf of respondent No.1.
1. By way of this petition under Article 226 of the
Constitution of India, petitioner has prayed to quash and
set aside impugned orders passed by learned Income
Tax Appellate Tribunal (for short learned Tribunal) in Stay
Application Nos.85 & 86/AHD/2011 in ITA Nos.386 & 387/
AHD/2011 for AY 2008-09 and 2009-10, by which learned
Tribunal has extended stay granted earlier beyond period
of 360 days.
2. Feeling aggrieved by and dissatisfied with earlier
orders for AY 2008-09 and 2009-10, assessee had
preferred appeals before learned Tribunal. That as per
assessment order for AY 2008-09, tax liability is for an
amount of Rs.7,21,19,094/- (including interest u/s 201(1A) of
Rs.1,20,19,849/-) and for AY 2009-10, tax liability is
Rs.9,04,43,478/- (including interest u/s 201(1A) of
Rs.1,75,05,189/-). That in respective appeals before the
learned Tribunal, assessee preferred stay applications.
That out of total tax and interest liability for AY 2008-09,
out of Rs.7,21,19,094/-, assessee had already paid
Rs.6,37,50,000/- and sum of Rs.83,69,094/- was outstanding.
Similarly, for AY 2009-10, out of total tax liability including
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interest of Rs.9,04,43,478/-, assessee had already paid
Rs.8,13,50,000/-. Thus, only sum of Rs.90,93,478/- was
outstanding. That learned Tribunal vide order dated
25.3.2011 in Stay Application Nos.15 and 16 of 2011, stayed
demand for period of 180 days from date of receipt
of order or till appeal of assessee gets decided. That
stay of demand granted earlier has been extended from
time to time and stay has been extended beyond the
period of 360 days i.e. in fact for approximately more than
1000 days. Hence, feeling aggrieved by and dissatisfied with
extension of stay of demand granted by learned
Tribunal, more particularly, beyond period of 365 days,
revenue has preferred present Special Civil Application
under Article 226 of Constitution of India.
3. Mrs. Bhatt, learned advocate appearing on behalf of the
revenue has vehemently submitted that extension of stay of
demand granted by learned Tribunal beyond period of
365 days in all is absolutely illegal and wholly without
jurisdiction and contrary to section 254(2A) of Income Tax
Act (for short Act).
3.1 It is submitted that while extending stay of demand
granted earlier beyond period of 365 days, learned
Tribunal has materially erred in not appreciating third
proviso to section 254(2A) of Act. It is vehemently
submitted that in view of legislative mandate so provided
in section 254(2A) of Act, Tribunal has no jurisdiction
to extend stay granted earlier beyond period of 365
days and in fact, as per third proviso to section 254(2A) of the
Act, order of stay beyond 365 days stands vacated even if
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delay in disposing appeal is not attributable to the
assessee. It is submitted that therefore, in view of section
254(2A) of Act, more particularly second proviso and third
proviso to section 254(2A) of Act, any extension of stay
and/or granting of stay or demand beyond period of 365
days is absolutely illegal, wholly without jurisdiction and
contrary to section 254(2A) of Act.
3.2 It is vehemently submitted by Mrs. Bhatt, learned
advocate appearing on behalf of revenue that section
254(2A) of Act mandates that no stay order can exceed
total period of 365 days and Tribunal is foreclosed and barred
from passing order extending stay of demand beyond 365
days. It is further submitted by Mrs. Bhatt that appeal is
provided under Statute and even learned Tribunal being a
creation of Statute is bound by provisions of section
254(2A) of Act. It is further submitted that if Statute
provides grant of stay of demand during pendency of the
appeal before learned Tribunal, in that case, same
shall always be subject to provisions of Act. It is
submitted that once under law/Statute, it is provided that
there cannot be any stay beyond total period of 365 days,
same has to be respected by everybody including the
learned Tribunal.
3.3 It is vehemently submitted by Mrs. Bhatt that legislative
intent of restricting period of stay of demand for a
maximum period of 365 days is to see that appeals by the
Tribunal are heard expeditiously and assessee may not get
undue benefit of stay of demand granted by Tribunal.
It is submitted that in most of cases, after obtaining stay
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of demand, it is assessee, who ask for time. It is
submitted that to curb such practice and/or delay tactics,
period of stay of demand has been restricted upto a
maximum period of 365 days only. It is further submitted that
many times, though while granting stay, learned
Tribunal generally observes that appeal to be listed at top
of board, such matters are ordinarily listed at bottom
of board and no priority is given.
3.4 It is submitted by Mrs. Bhatt appearing on behalf of the
revenue that in present case, there is huge tax liability
pending since many years and stay of demand granted by
learned Tribunal which has been extended from time to
time and in present case, for approximately 1000 days. It
is submitted that on one hand, appeals are not heard and
on other hand, learned Tribunal goes on extending the
stay of demand and therefore, interest of revenue has
been prejudiced. It is submitted that in any case, once third
proviso to section 254(2A) of Act provides that beyond the
period of 365 days, there shall be vacation of stay of demand
granted earlier, grant of stay of demand and/or extension
of stay of demand beyond period of 365 days is wholly
without jurisdiction.
In support of her submission, Mrs. Bhatt, learned
advocate appearing on behalf of revenue has heavily
relied upon decision of Division Bench of Delhi High
Court in case of Commissioner of Income Tax Vs. Maruti
Suzuki (India) Limited decided on 2.1.2014 in Writ Petition
(Civil) No.5086 of 2013 and in support of her prayer to allow
present petition and to quash and set aside impugned
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orders passed by learned Tribunal extending stay of
demand in respective appeals beyond period of 365 days.
Making above, submissions, it is requested to allow the
present Special Civil Application and grant relief as
prayed for.
4. Present petition is opposed by Shri SN Soparkar,
learned senior counsel appearing for Singhi & Co. appearing
on behalf of respondent. Shri Soparkar, learned senior
counsel has vehemently submitted that as such, issue in
present petition is now not res judicata in view of the
decision of Hon'ble Supreme Court in case of
Commissioner of Customs and Central Exercise, Ahmedabad
V. Kumar Cotton Mills Pvt. Ltd reported in (2005) 180 ELT
434(SC). Shri Soparkar has also heavily relied upon the
decision of Division Bench of this Court in case of
Commissioner Vs. Small Industries Development Bank of India
in Tax Appeal No.341 of 2014 and other allied tax appeals, in
which Division Bench had occasion to consider the
para materia provisions under Central Excise Act, more
particularly, section 35C(2A) of Central Excise Act.
It is vehemently submitted that as observed by the
Division Bench of this Court in aforesaid decision, there
cannot be any legislative intent to punish person/assessee
for no fault of him.
4.1 It is submitted by Shri Soparkar, learned senior counsel
that there may be number of reasons for not disposing of the
appeals by learned Tribunal within period of 180 days
and/or at earliest. It is submitted that following may
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be/can be reasons for delay in disposing of appeal by
learned Tribunal.
1. Shortage of Tribunal Members and many of the
times, Bench is not functioning. Next hearing xed
almost after months time.
2. Many times, Bench sits one after another
due to shortage of Members. As result, no heavy
stay granted matters can be taken up in either
sitting.
3. In International tax cases, adjournments are
being sought on account of non-availability of
Assessing Officer to argue case.
4. In transfer pricing cases, adjournments are being
sought on ground that comments / report of
Transfer pricing Ofcer has not been received or
non-availability of Transfer pricing Ofcer for the
hearing.
5. Adjournments are taken on ground that
Senior people from Department not available to
argue in big cases.
6. Many times, stay granted matter cannot be taken
up for hearing on ground that similar issue is
involved in earlier years which is not stay granted
matter and pending for disposal.
7. On some occasions, paperbooks are being filed
late by Assessee/ Department (sometimes even
on day of hearing).
8. Assessees Counsel taken adjournment on
account of being not in town, being busy in some
High Court matter, etc.
9. On many occasions, Member who had heard
matter gets transferred and accordingly, the
matters gets released for re-hearing which comes
in normal course.
10. Whenever Tribunal grants stay order, it
fixes appeal/s for early hearing invariably.
However when appeal is taken up for hearing
sometimes it is found that AO or CIT(A) have
followed order/s of earlier year which is still
pending. In such situation order of AO and /
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or CIT(A) do not carry any discussion or reasoning;
they only follow earlier order. In such as situation it
becomes necessary to adjourn matter and club
it with earlier years appeal/s which are pending
before tribunal. This may take some time
because where appeal/s are before different
benches power of clubbing is only with Vice
President of Tribunal. Further even after the
matters are clubbed, firstly appeal/s of earlier
year/s have to be heard first. On some occasions
efforts are made to hear appeals together.
However where earlier appeals involves many
grounds (so also stay granted appeal) it may not
be feasible to do so. This requires that earlier
year/s appeal/s must be disposed off first and only
thereafter stay granted appeal must be heard. In
such situation so long as earlier years appeals are
not heard and orders are not available stay
granted matters remain pending to fault of
noone. Sometimes appeal/s also get blocked
because earlier year/s appeal/S are pending
before Jurisdictional High Court or Hon'ble
Supreme Court.
4.2 Shri Soparkar, learned senior counsel appearing on
behalf of respondent assessee has submitted that despite
there being no fault on part of assessee and/or the
delay in not disposing of appeals by learned Tribunal
within period of 180/365 days may not be attributed to the
assessee, assessee cannot be punished, more particularly
when initial stay has been granted after due application of
mind by learned Tribunal and after strong case is made
out by assessee for grant of stay of demand. It is
submitted that initially when stay of demand has been
granted by learned Tribunal, stay of demand is never
granted mechanically. It is submitted that initial stay of
demand is always granted by learned Tribunal after due
application of mind and having found strong prima facie
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case for grant of interim relief. It is submitted that therefore,
as such, section 254(2A) of Act is required to be read in
such manner that it may not suffer from vice of
unconstitutionality.
4.3 He has further submitted that even some directions can
also be issued to learned Tribunal to see that in cases
were there are stay of demands, priority shall be given to such
matters and there is no delay in disposing of such appeals and
all efforts are made by learned Tribunal to decide and
dispose of such appeals at earliest looking to the
legislative intent provided in section 254(2A) of Act.
4.5 It is further submitted by Shri Soparkar, learned senior
counsel that in present case, appeals were not decided
and disposed of by learned Tribunal as issue involved
in appeals was pending before Hon'ble Supreme
Court. It is submitted that in present case, against the
total demand of Rs.7,21,19,094/-, substantial amount has
already been paid by assessee. It is submitted that even
initial stay of demand was granted by learned Tribunal
after recording reasons and considering fact that in
identical matters, Hon'ble Supreme Court granted stay
against coercive steps. It is submitted that therefore, in the
facts and circumstances of case, learned Tribunal has
not committed any error in extending stay of demand for
more than 365 days, by passing impugned order.
5. Heard learned advocates appearing on behalf of the
parties at length.
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5.1 By way of this petition under Article 226 of the
Constitution of India, petitioner revenue has challenged
impugned orders passed by learned Tribunal in
respective stay applications in respective appeals extending
stay of demand granted earlier beyond period of 365 days
and in present case, for approximately 1000 days.
It is case on behalf of revenue that in view of
section 254(2A) of Act more particularly, third proviso to
section 254(2A) of Act, learned Tribunal has no
jurisdiction to extend stay of demand beyond 365 days.
Section 254(2A) of Act reads as under:
2[(2A) In every appeal, Appellate Tribunal,
where it is possible, may hear and decide such
appeal within period of four years from end of
financial year in which such appeal is filed
under sub-section (1) 3[or sub-section (2)] 4[or sub-
section (2A)] of section 253:]
[Provided that Appellate Tribunal may, after
considering merits of application made by
assessee, pass order of stay in any
proceedings relating to appeal filed under sub-
section (1) of section 253, for period not
exceeding one hundred and eighty days from the
date of such order and Appellate Tribunal shall
dispose of appeal Within said period of stay
specified in that order:
Provided further that where such appeal is not so
disposed of within said period of stay as
specified in order of stay, Appellate
Tribunal may, on application made in this behalf
by assessee and on being satisfied that the
delay in disposing of appeal is not attributable
to assessee, extend period of stay, or pass
order of stay for further period or periods as it
thinks fit; so, however, that aggregate of the
period originally allowed and period or periods
so extended or allowed shall not, in any case,
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exceed three hundred and sixty-five days and the
Appellate Tribunal shall dispose of appeal
within period or periods of stay so extended or
allowed:]
[Provided also that if such appeal is not so disposed
of within period allowed under first proviso
or period or periods extended or allowed under
second proviso, which shall not, in any case,
exceed three hundred and sixty-five days, order
of stay shall stand vacated after expiry of such
period or periods, even if delay in disposing of
appeal is not attributable to assessee]
5.2 It is true that as per third proviso to section 254(2A) of
Act, if such appeal is not so disposed of within period
allowed under first proviso i.e. within 180 days from the
date of stay order or period or periods extended or
allowed under second proviso, which shall not, in any
case, exceed three hundred and sixty-five days, order of
stay shall stand vacated after expiry of such period or
periods, even if delay in disposing of appeal is not
attributable to assessee. Therefore, as such, legislative
intent seems to be very clear. However, purpose and
object of providing such time limit is required to be
considered. purpose and object of providing time limit as
provided in section 254(2A) of Act seems to be that after
obtaining stay order, assessee may not indulge into delay
tactics and may not proceed further with hearing of the
appeal and may not misuse grant of stay of demand. At
same time, duty is also cast upon learned Tribunal to
decide and dispose of such appeals in which there is stay of
demand, as early as possible and within period prescribed
under first proviso and second proviso to section 254(2A) of
Act of Act i.e. within maximum period of 365 days.
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However, one cannot lost sight of fact that there may be
number of reasons due to which learned Tribunal is not in
position to decide and dispose of appeals within the
maximum period of 365 days despite their best efforts. Some
of reasons due to which learned Tribunal despite its
best efforts is not in position to dispose of the
appeal/appeals at earliest are stated herein above. There
cannot be legislative intent to punish person/ assessee
though there is no fault of assessee and/or appellant. The
purpose and object of section 254(2A) of Act is stated
herein above and more particularly with view to see that in
cases where there is stay of demand, appeals are heard
at earliest by learned Tribunal and within stipulated
time mentioned in section 254(2A) of Act and assessee
in whose favour there is stay of demand may not take undue
advantage of same and may not adopt delay tactics and
avoid hearing of appeals. However, at same time, all
efforts shall be made by learned Tribunal to see that in the
cases where there is stay of demand, such appeals are heard,
decided and disposed of at earliest and periodically the
position/ situation is monitored by learned Tribunal and
stay is not extended mechanically.
5.3.1 Identical question came to be considered by the
Division Bench of this Court in case of Small Industries
Development Bank of India (supra) and while dealing with
similar provisions under Central Excise Act, 1944 more
particularly section 35C(2A) of Act, following substantial
questions of law came to be considered by this Court.
(i) Whether learned Appellate Tribunal has
jurisdiction to extend stay granted earlier
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beyond total period of 365 days in view of
statutory provisions contained in Section 35C(2A)
of Central Excise Act, 1944?
(ii) Whether even if it is held that learned
Appellate Tribunal can extend stay granted
earlier beyond total period of 365 days, the
learned Appellate Tribunal is required to pass a
speaking order/reasoned order considering 3rd
proviso to section 35C(2A) of Central Excise
Act, 1944?
5.4 After considering rival submissions and considering
various decisions of other High Courts and this Court and
even decision of Hon'ble Supreme Court in case of
Kumar Cotton Mills Pvt. Ltd (supra), Division Bench has
observed as under:
5.04Therefore, in light of above decision
of Honble Supreme Court in case of
Kumar Cotton Mills Pvt. Ltd (supra), third
proviso to section 35C(2A) which has come
into effect w.e.f. 10/5/2013 is to be construed
by holding that if conditions mentioned in
third proviso to section 35C(2A) is satisfied
i.e. if Appellate Tribunal is satisfied on an
application made by assessee / appellant
that delay in disposing of appeal within
total period of 365 days from date of
grant of initial stay is not attributable to such
party, and despite fact that assessee /
appellant has cooperated, Appellate
Tribunal could not, for various reasons,
dispose of appeal within 365 days, in that
case, power of Appellate Tribunal to
extend stay even beyond 365 days from the
date of grant of initial stay are not
circumscribed. However, same shall be
subject to satisfaction of learned
Appellate Tribunal that assessee /
appellant is not at all at fault and delay in
not disposing of appeal within total 365
days is not attributable to such assessee /
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appellant and that there was no non-
cooperation on part of assessee /
appellant.
5.05 It is true that in taxing matter any
provision is required to be read literal and
plain meaning should be adopted, however,
while interpreting such provision Court is
also required to see that it may not lead to
any arbitrariness and/or is not in violation of
Article 14 of Constitution of India and by
such interpretation if person who is not at
fault at all may not be punished. While
enacting section 35C(2A) more particularly
third proviso to section 35C(2A), legislature
could not have either intended to punish even
those persons / assesses / appellants who are
not at fault. In other words, delay in not
disposing of appeal within 365 days is not
attributable to them. Therefore, as such in
view of decision of Honble Supreme
Court in case of Kumar Cotton Mills Pvt.
Ltd., question No.1 is as such now not res-
integra and question No.1 is required to
be answered in favour of assessee and
against revenue, however, with some
further observations which will be made
hereinafter.
5.06.1. In case of Poly Fill Sacks Versus
Union of India, reported in (2005) 183 ELT
344 (Gujarat) while interpreting section
35C(2A) as it stood prior to 10/5/2013, the
Division Bench of this Court in para 6 to 13
held that though language employed by the
statue in section 35C(2A) appears to be
mandatory in terms, considering object
behind provision, it has to be understood
to mean as being directory in nature. In the
said decision it is also further observed and
held by Division Bench that from insertion
of section 35C(2A) of Central Excise Act
on statute book, it cannot infer legislative
intent to curtail/withdraw powers of the
Appellate Tribunal to grant stay in
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appropriate cases and it is also not possible to
infer any curtailment of such powers beyond
period of six months (180 days). Para 6 to
13 of decisions of Division Bench in the
case of Poly Fill Sacks (supra) reads as
under :
6. Section 35C of Act deals with the
Orders of Tribunal and sub-section
2A has been inserted w.e.f.11-05-2002
and reads as under:
[(2A) Appellate Tribunal shall,
where it is possible to do so, hear and
decide every appeal within period of
three years from date on which such
appeal is filed :
Provided that where order of stay is
made in any proceeding relating to an
appeal filed under sub-section (1) of
section 35B, Appellate Tribunal shall
dispose of appeal within period of
one hundred and eighty days from the
date of such order :
Provided further that if such appeal is
not disposed of within period
specified in first proviso, stay
order shall, on expiry of that period,
stand vacated.]
On plain reading of provision it
becomes apparent that where order
of stay is made in any proceeding
relating to appeal, Tribunal is
required to dispose of appeal within
period of 180 days from date of
such order granting stay of recovery
and under Second Proviso it is laid
down that in case such appeal is not
disposed of within period specified
in First Proviso, on expiry of the
said period, stay order shall stand
vacated. main provision states that
appellate Tribunal shall, where it is
possible to do so hear and decide every
appeal within period of three years
from date of filing.
7. Thus, scheme is that appeal is
required to be disposed of within a
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period of three years from date of
filing, but where stay is granted by the
Tribunal, said period of three years
stands curtailed to 180 days from the
date of order granting stay. Though,
language employed by statute
appears to be mandatory in terms,
considering object behind the
provision it has to be understood to
mean as being directory in nature. In
other words, disposal of appeal has to be
within specified period, three years
or 180 days, where it is possible to do
so. What meaning does one ascribe to
phrase where it is possible to do
so, if contention of Revenue is
required to be upheld. If Second Proviso
is read in isolation interpretation
canvassed by Revenue may appear to be
correct. But one cannot loose sight of
legal position : proviso carves out
exception to main rule.
This Court in case of Indo-Nippon
Chemicals Co.
Ltd. & Anr. Vs. Union of India & Ors.,
2002 (49) RLT
642 (Guj.) has laid down :
..... normal function of proviso is
to except something out of the
enactment or to qualify something
enacted therein which, but for the
proviso, would be within purview of
enactment. To this real nature of
proviso is also another principle of
interpretation that proper function
of proviso is that it qualifies the
generality of main enactment by
providing exception. Ordinarily, it is
foreign to proper function of proviso
to read it as providing something by way
of addendum or dealing with a
subject which is foreign to main
enactment. Proviso can be taken aid of
as useful guide to construction of the
main enactment. If enacting portion
of Section is not clear proviso
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appended to it may give indication as
to its true meaning. As stated by Lord
Herschel, of course, proviso may be
used to guide you in selection of one
or other of two possible constructions of
words to be found in enactment,
and show when there is doubt about its
scope, when it may reasonably admit of
doubt as to having this scope or that,
which is proper view to
take of it. Mudholkar, J. in Hindustan
Ideal Insurance Co. Ltd. vs. Life
Insurance Corporation Ltd. reported in
AIR 1963 Hon'ble Supreme Court
1087 stated rule thus there is no
doubt that where main provision is
clear, its effect cannot be cut down by
proviso. But where it is not clear, the
proviso, which cannot be presumed to
be surplus age, can properly be looked
into to ascertain meaning and scope
of main provision. Since natural
presumption is that but for proviso,
enacting part of Section would
have included subject matter of the
proviso, enacting part should be
generally given such construction
which would make exceptions
carved out by proviso necessary and
construction which would make the
exceptions unnecessary and redundant
should be avoided (See Principles of
Statutory Interpretation by Justice
G.P.Singh, Eighth Edition, 2001, pages
168, 169, 174, 175 and 176).
8. When legislature has provided in
main provision, i.e. sub-section (2A)
of Section 35C of Act, that CESTAT
may hear and decide appeal within a
period of three years, where it is
possible to so, legislature is well aware
of administrative exigencies and
difficulties of said body. There could
be host of reasons ranging from non-
availability of bench due to non-
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appointment of adequate number of
technical and/or judicial members at a
particular station to quantum and
quality of appeals at particular station.
One cannot and should not even attempt
to exhaustively list these. Suffice it to
state discretion available to
CESTAT under Section 35C (2A) of the
Act does not stand obliterated by
insertion of two provisos, and more
particularly by Second Proviso.
9. matter may be considered from a
slightly different angle. Section 35C(1)
of Act empowers CESTAT to pass
such orders, on appeal before it, as
CESTAT thinks fit. said provision
confers on CESTAT powers of widest
amplitude in dealing with appeals before
it, grants by implication power of
doing all such acts, or employing such
means, as are essentially necessary to
its execution. statutory power under
said section carries with it duty in
proper cases to make such orders for
staying recovery of demand of duty, etc.
pending appeal before Tribunal,
as will prevent such appeal, if
successful, from being rendered
nugatory. Sub-section (2A) of Act
was brought on statute book to ensure
disposal of pending appeals within a
reasonable time frame and curtail
delays. But from this it is not possible to
infer legislative intent to
curtail/withdraw powers of Tribunal
to grant stay in appropriate cases. It is
also not possible to infer any curtailment
of such powers beyond period of six
months. legislature would have
specifically provided so if it was so
intended. Any other interpretation of the
sub-section with both provisos would
frustrate object of Tribunal
dispensing justice in deserving cases
where assessee is not at fault in any
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manner : assessee having filed
appeal and stay application within
period of limitation, prima facie proved
his case at hearing and obtained stay
with or without conditions, and
cooperating with Tribunal for hearing
and disposal of appeal : but, the
Tribunal is not in position to proceed
for various reasons.
10. contention on behalf of
Revenue that assessee must
approach Tribunal and seek
extension of stay already granted is
misconceived at least in relation to
orders of Tribunal made before 11-
05-2002. Firstly, it proceeds on a
fallacious premise as stated
hereinbefore. Secondly, in absence of
any change in circumstances why should
Tribunal be inundated with
extension applications when admittedly,
it is already overburdened and reeling
under backlog of pending appeals.
11. However, in cases where the
Revenue finds that particular assessee
having obtained stay is adopting dilatory
tactics, it is always open to Revenue to
move Tribunal in such an
eventuality.
12. For period subsequent to the
insertion of Second Proviso the
Tribunal should, as matter of practice,
specify time period during which the
stay shall operate after exercising its
judicial discretion. period may be
limited or could be co-terminous with
disposal of appeal on consideration of
all relevant factors in given fact
situation.
13. Therefore, as held by Apex
Court in case of Commissioner of
Customs & Central Excise, Ahmedabad
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Vs. M/s. Kumar Cotton Mills (P) Ltd.
(supra) assessee cannot be punished
for matters which may be completely
beyond control of assessee. The
situations set out by Apex Court in
its order are only illustrative and not
exhaustive. object of provision is
expressed by Apex Court to be for
purpose of curbing dilatory
tactics of assesses, who having obtained
interim order in their favour, seek to
continue interim order while
delaying disposal of proceedings.
observations i.e. last sentence
on which reliance has been placed by
learned Senior Standing Counsel
regarding latitude being given to the
Tribunal are relatable only in the
situation where extension of period of
stay is sought.
5.06.2. Identical question came to be
considered by Rajasthan High Court in the
case of Chhote Lal Virendra Kumar Jain
Versus Union of India & Others, in Civil Writ
Petition No.1149 of 2014 dated 9/4/2014
(supra) and in paragraph Nos. 14 to 16, the
Rajasthan High Court has observed and held
as under :-
14. It appears that provision has
been made for purpose of curbing
dilatory tactics of such of assessees
who after getting interim order in their
favour to continue by delaying the
disposal of proceedings and that
certainly deprive revenue not only of
benefit of assessed value but at
same time of decision on the
point which may have impact on the
other pending matters. But, at same
time, third proviso has been inserted
in Sec.35C(2A) by Finance Act, 2013
cannot be construed as punishing the
assessees for matters which may be
completely beyond their control and we
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can take judicial notice of pendency of
appeals and workload assigned to the
Tribunal and it is not possible for the
Tribunal to dispose of matters under
mandate of law. Occasionally, for the
reasons of other administrative
exigencies for which assessee
cannot be held liable and if there is no
reason attributable to assessee
regarding delay in disposal of the
pending appeal or noncooperation and if
appeal could not have been heard which
is beyond control of the
petitioner/assessee at least some
balance has to be made to protect the
right and interest of assessee during
intervening period appeal
remain pending before Tribunal.
15. In instant case, Tribunal
after hearing parties on application
dt.30.10.2013 filed by assessee
seeking extension of stay order passed
by Tribunal dt.20.9.2012, was of the
view that appeal could not be
disposed of for no fault of petitioner
assessee but in view of pendency of
other old appeals and that was the
reason which prevailed upon the
Tribunal to extend operation of stay
granted dt.20.9.2012 during pendency
of appeal vide its order dt.23.1.2014, in
our considered view, after stay order
granted on 20.9.2012 has been allowed
to continue to be operative during
pendency of appeal vide order
dt.23.1.2014, proceedings which
have been initiated by department
during intervening period which
have been treated to be withdrawn vide
their later communication dt.29.1.2014
by fiction of law, became nonest and
inoperative and very initiation of the
proceedings by respondent u/s.87(b)
of Finance Act, 1944 dt.21.1.2014
served on banker of petitioner
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and bank account of petitioner
which was debited through bank
attachment on 22.1.2014 could not be
held justified in eye of law and we
find substance in submission made
by petitioner that after passing of
order by Tribunal dt.23.1.2014
respondents remain under obligation to
refund money which was recovered
from petitioner by debiting the
petitioners account on 22.1.2014 and
very initiation of proceedings
deserves to be quashed in eye of law
in view of order of tribunal dt.
23.1.2014.
16. Be that as it may, it is settled
principles of law and which is consistent
and recognized that where case is not
considered because of multiplicity of
business of Court party ought
not to be prejudiced by that delay and
when act of Court can prejudice
no man, ditto would be for omission
in keeping with aforesaid principles
that if matter has not been taken up
for consideration on given date at least
litigant cannot be left to suffer for
such reason over which he has no
control. reason or cause for such
eventuality could be many and usually
as we have noticed that because of
heavy load of work but still litigant
cannot be made to suffer for those
reasons but keeping in view the
mandate of law by introducing Sec.35C
(2A) by Finance Act, 2002 and third
proviso added by Finance Act, 2013 In
particular, it will be for Tribunal to
see that matters must be decided
within period stipulated under the
mandate of law, at same time, where
definite stay order has been granted,
such cases must be heard on priority
basis.
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5.06.3. In case of Narang Overseas Pvt.
Ltd. Versus Income Tax Appellate
Tribunal, Mumbai, rendered in Writ Petition
No.1454 of 2007, Bombay High Court had
occasion to consider para-materia
provision in Income Tax Act Section
254-2A of Income Tax Act and after
following decision of Honble Supreme
Court in case of Kumar Cotton Mills Pvt.
Ltd (supra), in para 12 it is observed and held
as under:
12. We are of respectful view that
law as enunciated in Kumar Cotton
Mills Pvt. Ltd. (supra) shouldalso apply
to construction of third proviso
as
introduced in Section 254(2A) by the
Finance Act, 2007. power to grant
stay or interim relief being inherent or
incidental is not defeated by the
provisos to subsection. third
proviso has to be read as limitation on
power of Tribunal to continue
interim relief in case where hearing
of Appeal has been delayed for acts
attributable to assessee. It cannot
mean that construction be given that
power to grant interim relief is
denuded even if acts attributable are
not of assessee but of revenue or
of Tribunal itself. power of the
Tribunal, therefore, to continue interim
relief is not overriden by language of
third proviso to Section 254(2A).
This would be in consonance with the
view taken in Kumar Cotton Mills Pvt.
Ltd (supra). There would be power in
Tribunal to extend period of stay
on good cause being shown and on the
Tribunal being satisfied that matter
could not be heard and disposed of for
reasons not attributable to the
assessee.
5.07. result of aforesaid discussion
would be that by section 35C(2A) of the
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Central Excise Act it cannot be inferred a
legislative intent to curtain / withdraw power
of Appellate Tribunal to extend stay
beyond total period of 365 days. However,
aforesaid extension of stay beyond the
period of total 365 days from date of
grant of initial stay would always be subject
to subjective satisfaction by learned
Appellate Tribunal and on application
DEPUTY COMMISSIONER INCOME TAX - TDS CIRCLE v. VADOFONE ESSAR GUJARAT LIMITED & 1