By TIOL News Service

ALLAHABAD, MAY 14, 2015: THERE are four appeals filed by CCE, Noida and two Writ Petitions by the assessee L.G.Electronics.

The appeal by the department is because they are aggrieved with the order dated 30.09.2014 of the Larger Bench of the CESTAT - 2014-TIOL-1965-CESTAT-DEL-LB where it is inter alia held that -

"…even in a case where the period of 365 days has passed from the date of initial grant of stay but the appeal could not be disposed of for reasons not attributable to the appellant/ assessee (in whose favour the stay was granted); and where the Tribunal is satisfied that the appellant/ assessee was ready and willing for disposal of the appeal and/ or had not indulged in any protractive strategies, extension of stay could be granted (beyond the period of 365 days) by passing a speaking order disclosing the satisfaction of the Tribunal as to absence of any delay/ protractive stratagems by the appellant/ assessee resulting in non disposal of the appeal or that the appeal could not be disposed of on account of pendency of several appeals or other reasons attributable to the structure and context of the Tribunal or other appropriate reasons…

In the two writ petitions filed by the assessee, prayer is made to issue a writ of mandamus to stay the recovery of the disputed amount for the relevant assessment year till the disposal of their appeal before the Income Tax Appellate Tribunal, New Delhi.

The High Court observed that since the issue involved in the aforesaid cases is more or less identical and the language of the two sections namely Section 35C(2A) of the Act, 1944 and Section 254 (2A) of the Act, 1961 are similar, both these matters are clubbed together and decided by a common judgment.

The Counsel for the Department(s) submitted that the order of the Tribunal is in teeth of the mandatory statutory provisions, therefore, unsustainable in the eyes of law; that in view of the language of Section 254(2A) of the Act, 1961, no relief can be granted to the petitioner.

The High Court observed that it has been receiving appeals/ writ petitions on identical issue namely the interim order granted in favour of the assessee having been vacated/extended by the Tribunal after expiry of the outer limit of the prescribed period of 365 days; in cases where the stay order has been vacated the assessee has approached this Court while in other cases where the Tribunal has extended the interim order beyond 365 days, the department has challenged the order of the Tribunal before this Court.

It is also observed that in a number of cases the Court had disposed of such Excise Appeals/ Writ Petitions by merely observing that the appeal may be decided preferably within six months from the date of the order of the High Court and in the meantime interim order may continue. But, this was not a solution to the problem in hand. Inasmuch as the High Court cannot keep on passing orders for extending the stay with a direction to the Tribunal to decide the appeal within six months inasmuch as such directions on regular basis would be impossible for any Tribunal to comply because of heavy work; that if such directions continue to be made by the High Court, a day will come when the Tribunal will be flooded with directions to decide the appeal within six months;that the Tribunal cannot be expected to decide the appeals within six months, as per the order of the High Court, when it could not do so within a year because of pendency of large number of cases despite the statutory requirement.

The High Court further noted - What is likely to happen, if the High Court continues to issue such directions to decide such appeals/writ petitions where interim orders have been granted out of turn, is that one day the Tribunal will be flooded with such directions which it will not be able to comply. There has to be some mechanics for deciding the cases where interim order has not been granted on their turn and for cases where interim order has been granted simultaneously in whatever proportion it may be.

Taking a view that a solution has to be found to the problem inasmuch as filing of Excise Appeal/Writ petition of like nature before the High Court must also be brought to an end;that the substantial question of law which arises in the Excise Appeals/writ petitions must be answered once and for all, the High Court proceeded to decide the bunch of appeals/writ petitions.

After extracting the provisions of Section 35C(2A) of the Central Excise Act, 1944 (Same is the language of Section 254 (2A) of the Act, 1961) as amended by the FA, 2013, the High Court observed -

++ The aforesaid two sections contain two stipulations:

(a) Time limit has been fixed for the Tribunal to decide an appeal in which an interim order has been granted i.e. 180 days at the first instance and in any case within 365 days.

(b) In case the appeal is not so decided within the time limit fixed, the interim order granted by the Tribunal shall stand vacated, even if delay in disposing of the appeal is not attributable to the assessee.

++ In the lis before the Tribunal there are two parties namely the assessee and the department. Over the Tribunal the assessee or the department has no control. But if the Tribunal fails to perform its part of obligation within the time fixed under the aforesaid two Sections, for whatever reason it may and not attributable to the assessee, it is the assessee alone who has been made to suffer. Choosing of one party only for the sufferance because of non-compliance of the statutory time frame by the Tribunal, in our opinion, would be unfair and discriminatory. Parties before the Tribunal to a lis must be treated at par.

++ If the Tribunal is not able to decide the appeal within the time limit prescribed for reasons beyond its control and the assessee is not responsible for the same, should the assessee/appellant alone be made to suffer, is the moot question to be considered by us.

++ The answer to the said question, in our opinion, has to be in negative. If the assessee has not sought adjournment and has not avoided hearing of the appeal in any manner, there can be little or no justification for his interim order being vacated only because 180/365 days have elapsed. Any other interpretation jeopardising the rights of such an assessee would in our opinion be per se arbitrary. It is settled law that the assessee cannot be permitted to suffer for the wrong of the Court/Tribunal nor the taxing authorities can be permitted to take benefit of the wrong committed by the Court/Tribunal.

++ There is a fundamental principle of law namely that no one shall be prejudiced by an act of Court which, in our opinion, would include a statutory Tribunal (actus curiae neminemgravabit). An act can either be an act of omission or be an act of commission. The non-disposal of an appeal, if not due to the fault of any of the parties, but due to the heavy work with the Tribunal, would fall under the category of "act of omission". No law can be so unfair as to say that if the Court/Tribunal is at fault, the parties shall suffer. No case law is required to support the proposition that an act of Court/Tribunal shall not prejudice a party.

Adverting to the apex Court decision in Sharif-Ud-Din vs. Abdul Gani Lone AIR 1980 SC, 303 and contents of page 381, 10th Edn., Maxwell on "Interpretation of Statutes", the High Court held -

+++ What follows is that if the law requires certain thing to be done within a time frame by an institution and the consequences of failure by the institution because of non-compliance of the condition fall upon someone else who has no control over the institution, then the provision of law shall be treated as directory.

+++ If a statutory provision contains a prescription and also stipulates the consequences of non-compliance of the condition, it is normally treated as mandatory. But in our opinion the consequences of such non-compliance with the direction should fall upon the same person for the provision to be saved from the clutches of arbitrariness and being hit by Article 14 of the Constitution of India.

+++ In our opinion even if the said sections are held to be mandatory, then what is contemplated by these sections is that there cannot be any extension of an interim order beyond 365 days. The sections do not bar filing of a second stay application if the earlier interim stay application and the interim order passed thereon has become lifeless because the technical reason of the expiry of 365 days. We have no doubt in our mind that in the cases where the assessee is not at fault in the matter of his appeal being not decided within the statutory period fixed under the aforesaid provisions and his interim order stands vacated for no fault of his, his right to file a second interim stay application cannot be said to have been taken away or barred.

+++ We are of the considered opinion that no interference is required against the order of the Excise Tribunal dated 30.09.2014, insofar as it directs that the interim order granted in favour of the assessee would continue so long as the appeals are not decided nor we find any illegality in the direction of the Excise Tribunal by which it has permitted all such assessees to make a fresh stay application whose stay orders had been vacated only because of the expiry of the period of 180/365 days, as the case may be.

+++ In order to avoid filing of such appeals/writ petitions of like nature before this Court in future, we provide that an assessee shall be at liberty to make a fresh interim stay application just before expiry of 365 days or just after expiry of 365 days before the Tribunal concerned. Such interim stay application of the assessee shall be considered by the Tribunal without being prejudiced in any manner with the fact that the earlier stay granted had expired because of the expiry of the period of 365 days. It will be open to the Tribunal to pass a fresh order on the fresh interim stay application in accordance with law.

The four appeals filed by the CCE, Noida were dismissed and the petitions filed by L.G. Electronics were disposed of by providing that if fresh stay applications are filed before the Tribunal, the same shall be considered on their own merits without being influenced with the fact that the earlier interim order stood vacated because of efflux of time only.

(See 2015-TIOL-1247-HC-ALL-CX)