Action on expiry of stay orders given by CESTAT – Board instigates further litigation
A great amount of time and money in litigation is wasted on ‘STAY' matters. In 2002, the government brought in a most impractical amendment to Section 35C of the Central Excise Act to stipulate that where stay is granted, the CESTAT should dispose of the appeal within 180 days and if it is not done so, the stay is automatically vacated. Nobody in the Board questioned as to why the assessee should be punished if the CESTAT is not able to decide his case within 180 days. But the CESTAT and Supreme Court were kind and held that CESTAT can extend the stay. So the procedure was like this.
1. Appeal to the CESTAT with an application for stay.
2. Once Stay is granted, don't relax – remember to file an application for extension of stay, which means fee for lawyers and wasting the time of the Tribunal.
To avoid this farce, Tribunal has adopted a system of granting stay in the first instance itself, till the appeal is decided.
Now the Board wants the second stage litigation – not exactly; they even propose a series of litigation – maybe the Board's gift to the Consultants.
Board states loftily;
1. Nothing prevents Tribunal from granting stay beyond six months. However, the extension of stay has to be applied for by the party.
2. When the Stay period (180 days) is over, the Department may by a simple letter ask the party to pay and the party would be at liberty to go back to the Tribunal for seeking extension of stay.
3. Coercive measures, without giving an opportunity to the party to seek further extension of stay should be avoided.
4. Where the Commissionerate feels aggrieved by an order of the Tribunal granting stay indefinitely till disposal of appeal, the said Tribunal order could be challenged before the jurisdictional High Court, citing the amended provisions.
So, now the Board wants to take this stay litigation to the High Court and flood the High Courts with useless litigation.
This missive was actually issued on May 26, but for some good reason, was not available for more than a month.
Can there be a law that if A does not do something, B will be punished?
In the IPCL case [], the Tribunal had observed, “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 the 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”
Immediately after this provision was brought into the statute, in our Seminar in Delhi, the Chairman, CBEC was asked why such draconian measures were brought in. He pointed out to the CBDT Chairman and said, “He did it last year and nobody questioned him; So I did it this year!”
CBEC Circular No. 925/15/2010/ CX , Dated : May 26, 2010