CA Ashish Gupta

In today’s business environment, it is next to impossible for any business entity to keep itself away from tax litigations either Direct Tax or Indirect Tax. Once an entity falls under its net, it will be continued until it becomes the part of the entity’s operations. In past few years, tax litigations has sharply rose in every region of our Country which may be driven because of complex business transactions, ever changing tax laws and aggressive tax authorities. Sometimes, the officials during assessments/audits don’t even spare the transactions supported by judgements in favour of assessee and adopt different view by distinguishing the facts with the covered matters. They might be justified in their action as it is part of their job as they have to meet their targets. Well I am not here to review or judge the actions or inactions of tax authorities, the purpose of this article is to bring out the essential information for filling appeal & physical appearance before CESTAT.

The assessee may appear in person or by authorized council on its behalf before CESTAT. The council appearing for the tax payer should have all the details relating to facts of the case, submissions made before lower authorities and contrary views adopted by them in their respective orders. Careful examination of these details is always desired for preparing the Grounds of Appeal and each such Ground, to the extent possible, should be supported by judicial precedents so as to strengthen the appeal submission. Nothing can be proved lawful unless the rules or laws applicable during the period of dispute have been properly understood & referred.

Two things should be remembered while mentioning the case laws i.e. the Favourable Case Laws & Unfavourable Case Laws on the subject matter. We need to see how we can differentiate the facts of our case with the facts of the unfavourable cases. One must also see the finality of any case law referred in submissions. For e.g. If a case has been decided in favour of assessee by Tribunal, it may be contended before High Court where the order of Tribunal is reversed or vice-a-versa. Thus, a proper research on the selection of case laws is required considering the current status of such cases.

There is a saying that “More you sweat in practice less you bleed in war”. Likely, a council should do enough practice with their submissions so that they would be ready to answer the questions raised by the Members during the hearing. One should also take care of the language to be used during hearing as it should not be offensive or insulting to anyone. The council may also prepare a summary or notes of the submissions which may be useful at the time of hearing.

I have summarised here few important questions pertinent to preparing of paper book & filling appeal with CESTAT:

Q.1 What are the attachments & other essential requirements for filling Appeal (Paper Book) with CESTAT?

  1. Duly Filed ST-5 in Four copies;
  2. Paper book should be indexed and serially numbered;
  3. Stick Court Stamp Fee of Rs.5 on Form ST-5;
  4. Power of Attorney in Original in favour of council to represent the matter;
  5. Copy of Order In Appeal in Original or certified copy by i.e. Order against which appeal is preferred;
  6. Copy of Order In Original i.e. Order passed by Adjudicating Authority, if different from Order in Appeal;
  7. Draft as Fee of filling appeal in favour or “Assistant Registrar, CESTAT _____” prescribed as under;

Amount of Duty Demanded

Fees (INR)

Rs.5 Lakhs or less

1,000

More than Rs.5 Lakhs up to Rs.50 Lakhs

5,000

More than Rs.50 Lakhs

10,000

 Rs.500 is payable in case of Application made for Stay or Rectification of Mistake or for restoration of an appeal or an application.

  1. Copy of Challan against the payment of impugned Demand, if no Stay petition is proceeded.
  2. Paper book should be centrally punched & tagged and each set should be tagged separately also.

Q.2 Whether an appeal can be filed without depositing duty contended or demanded raised under impugned order?

Ans. Yes. The appellant can file a Stay Application with CESTAT for obtaining stay on the operations of the impugned Order in Appeal or to get waiver from any pre-deposit until the final decision. The Stay Application may be filled either prior to or along with the Appeal itself. It will be considered as separate appeal and will be disposed after hearing the case from both sides. CESTAT may or may not completely or partially waive the requirement of any pre-deposit if the appellant has prima facie strong case.

However, you all must have read about the CBEC Draconian Circular No. 967/01/2013 – CX dated 01-01-2013 which requires payment of disputed demand on the issue of order by Commissioner (Appeals) confirming demand in Order in Original. This circular takes away the statutory right of the aggrieved party for making application of stay on the order of Commissioner (Appeals). It has caused chaos among tax payers & the tax practitioners as its main purpose was to collect duty at the earliest possible point. But this dream of the Government shattered as the circular was quashed by several High Courts & by the CESTAT Bangalore which says that “No coercive action during pendency of stay application”.

Although the operation of aforesaid Circular is being stayed by several High Courts, the said Circular has not been withdrawn by the Board.

Q.3 How long a Stay Petition shall be valid?

Generally, the validity of a Stay Order is mentioned in the Order itself. But in case it is not mentioned then the Stay will be expired within 180 days from the date of Order. Prior to 11-05-2002, a stay order operates until the disposal of appeal but consequent to amendment in Section 35(C) of Central Excise Act any stay order shall be vacated if the related appeal is not disposed of within 180 days from the date of stay order. This amendment invites great objections as it punishes the assessee for the reasons beyond his control. Apex Court comes to the rescue of the genuine assessee who is not responsible for the delay in disposal of appeal by Tribunal.

Consequently, there is a Board Circular No. 925/15/2010-CX dated 26-05-2010 which clarifies that a party will be allowed to apply for an extension of stay order if the appeal is not disposed of within the time limit. There shall be a reasonable opportunity given to the party for seeking further stay before initiating any recovery proceedings. Therefore, CESTAT will decide the question of extension of stay order and the same will be allowed if there is a good reason and not attributable to the assessee.

A council must remember to apply for such extension of stay order on or before the expiry of 180 days from the date of such order.

Q.4 How many times adjournment may be sought from CESTAT?

Each of the party in an appeal can seek adjournment from CESTAT for a reasonable cause which may be allowed by the tribunal after recording the reasons in writing but not for more than three times.

Q.5 Whether an appeal can be accepted before CESTAT even if it does not meet the criteria of Monetary Limit?

Monetary Limit for filling an appeal with CESTAT is Rs.5 Lakh with or without interest or penalty. However, the Member may allow any appeal where the amount of duty contended is less than the aforesaid limit.

Q.6 Whether additional Grounds of Appeal can be introduce before CESTAT which were not taken up before lower authorities?

Yes. The petitioner can bring any new ground of appeal which was not taken before lower authorities.

For e.g. In case the disputed demand has been raised by invoking extended period but it was not contended before lower authorities that the provisions of extended period are not applicable then this Ground can now be taken before CESTAT to defend the demand.

Q.7 Whether additional documents or evidences can be presented to Member during hearing?

Yes. The council may produce any evidence or case laws, not enclosed with paper book, in support of their submission at the time of hearing and the Member may allows such documents as part & parcel of paper book. In such situation, the council should bring three copies of such documents as two copies will be required for Members (in case of Two Member bench) and one for departmental representative.

Hope this article will help the beginners in preparing appeals & presentation before CESTAT.

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