Tribunal has no power to extend stay indefinitely - Board wants recovery to be initiated
PERHAPS, nowhere in the civilised world, you will have a law which says that if the Government fails to do something, the citizen will be punished.
As per Section 35C (2A) of the Central Excise Act, if the Tribunal does not dispose of an appeal within a maximum period of 365 days, the Stay granted will be vacated.
At present, the standard time taken for the CESTAT to dispose of an appeal is six years! Why is the Tribunal not able to dispose of the appeals within one year? The answer is not difficult to find. The Government and the Government alone is to blame. They don't have enough Benches of the Tribunal and even in the existing Benches, they don't have enough Members. If they are serious about clearing the pendency in the Tribunal, let them create a hundred benches instead of wasting five years of their time in their cadre review which they are not able to implement. For the fault of the Government, the poor appellant assessee is to be punished. Isn't this barbaric?
In Commissioner of Cus. & C.Ex., Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd. (), the Supreme Court observed,"The sub-section which was introduced in terrorem cannot be construed as punishing the assessees for matters which may be completely beyond their control. For example, many of the Tribunals are not constituted and it is not possible for such Tribunals to dispose of matters. Occasionally by reason of other administrative exigencies for which the assessee cannot be held liable, the stay applications are not disposed within the time specified."
The Tribunal in JP Transformers vs Commissioner of Central Excise - 2013-TIOL-1219-CESTAT-DEL, observed,"We consider the aforesaid decision of the Supreme Court to have purposively interpreted provisions of Section 35C(2A) of the 1944 Act, conscious of the supply-demand mismatch in the justice delivery system in so far as CESTAT is concerned…. Since the present appeal could not be disposed of within 365 days, for no fault of the assessee, and a prima facie case in favour the assessee was recorded by the earlier order dated 21.9.2012, the assessee should be entitled to waiver of pre-deposit of the assessed demand, during pendency of the appeal."
The Department was not happy with this extension of Stay by the Tribunal and took the matter in appeal to the High Court. The Allahabad High Court in Commissioner vs JP Transformers - , observed, "Though we are conscious of the pendency of the appeals and workload assigned to the Principal Bench as well as various Benches of CESTAT, we are of the view that entire object and purpose of insertion of sub-section 2A in Section 35C by Section 140 of the Finance Act, 2002 (20 of 2002) w.e.f. 11.5.2002 and third Proviso by Finance Act, 2013 will stand defeated, if the waiver of pre-deposit is granted indefinitely. The judgment in Kumar Cotton Mills Pvt. Ltd. (Supra) cannot be interpreted to give powers to the Tribunal to extend the order of waiver of pre-deposit indefinitely."
The High Court directed CESTAT to decide the appeal expeditiously and if possible within a period of six months. Please note the High Court did not say that the Tribunal cannot extend the Stay beyond 365 days; it only said that it cannot extend it indefinitely. In any case, the judgement of the High Court is per incuriam .
This judgement of the High Court has become a good weapon for the CBEC to further its ambitious recovery plans.
In a recent letter to the Chief Commissioners, CBEC Member Joy Kumari Chander communicated a copy of the judgement and stated,
"The above judgment will be useful in effecting recoveries of arrears, where stay orders have been issued by CESTAT and the appeal itself not decided within 365 days of such stay order. In terms of section 35C(2A) of the Central Excise Act, 1944, such stay orders stand vacated after 365 days."
CBEC Letter in F.No.275/05/2014-Cx.8A, Dated: February 19 2014