We are sharing with you an important judgement of the Hon’ble High Court of Delhi in the case of Commissioner of Central Excise, Delhi Vs. Brew Force Machine Pvt. Ltd. [AIT-2015-111-HC] on the following issue:
Issue:
Whether the CESTAT is empowered 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?
Facts & Background:
In the case of CIT Vs. Maruti Suzuki (India) Ltd. [2014 (362) ITR 215] (“Maruti Case”), the Division Bench of the Hon’ble High Court of Delhi while dealing with Section 254(2A) of the Income Tax Act, 1961 (“the IT Act”) as amended by the Finance Act, 2008, held that the Income Tax Appellate Tribunal does not have power and jurisdiction to extend an interim Stay Order beyond 365 days, even if the assessee was not at fault.
Third proviso to Section 254(2A) of the IT Act was substituted by the Finance Act, 2008 w.e.f. October 1, 2008 to provide as under:
“Provided also that if such appeal is not so disposed of within the period allowed under the first proviso or the period or periods extended or allowed under the second proviso, which shall not, in any case, exceed three hundred and sixty-five days, the order of stay shall stand vacated after the expiry of such period or periods, even if the delay in disposing of the appeal is not attributable to the assessee.”
Later in the case of Commissioner of Central Excise, Delhi Vs. Haldiram India Pvt. Ltd. decided on May 5, 2015 [CEAC 18/2015] (“Haldiram Case”), a Division Bench of the Hon’ble High Court of Delhi reversed the decision of a Larger Bench of the Tribunal in the case of Haldiram India Pvt. Ltd. Vs. Commissioner of Central Excise, Delhi [2014 (309) E.L.T. (Tri.-LB)],and applied the decision of the Maruti Case while interpreting Section 35C(2A) of the Central Excise Act, 1944 (“the Excise Act”), holding that an identically phrased provision in the IT Act was interpreted in Maruti Case to hold that the Income Tax Appellate Tribunal did not have power and jurisdiction to extend an interim stay order beyond 365 days, even if the assessee was not at fault.
Third proviso to Section 35C(2A) of the Excise Act reads as under:
“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 respondent, 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.”
However, a Division Bench of the Hon’ble High Court of Delhi in the case of Commissioner of Central Excise, Delhi Vs. Brew Force Machine Pvt. Ltd. [CEAC 27/2015], prima facie, felt that the observations in Haldiram Case may not be correct and appropriate as Section 35C(2A) of the Excise Act is not identically worded and parimateria to the third proviso to Section 254(2A) of the IT Act, as substituted by Finance Act, 2008. Hence, the matter was referred to the Full Bench of the Hon’ble High Court.
Held:
The Full Bench of the Hon’ble High Court of Delhi upheld the decision of the Division Bench and held as under:
