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| DATE: | July 17, 2012 (Date of publication) |
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| Click here to download the judgement (ecom_stay_demand_tribunal_powers.pdf) |
Tribunal has no power to extend stay beyond 365 days even if assessee not at fault
The Tribunal allowed the assessee’s stay applications for a period beyond 365 days (presumably following Tata Communications (ITAT Bom SB)). The department filed an appeal claiming that the grant of stay beyond 365 days was in contravention of the third proviso to s. 254(2A) inserted by the FA 2008 w.e.f. 1.10.2008. HELD by the High Court allowing the appeal:
The third proviso to s. 254(2A) as amended by the FA 2008 w.e.f. 1.10.2008 provides that if the appeal is not decided within the period of 365 days, the order of stay shall stand vacated after the expiry of such period even if the delay in disposing of the appeal is not attributable to the assessee. The Tribunal which is a creature of the statute has to abide by these statutory provisions in letter and spirit. The third proviso to the Finance Act 2008 makes it abundantly clear that the purpose of putting the outer limits is only for curtailing the period an order of stay can operate and to ensure that it has no effect after the period of 365 days from the date of initial order. An interpretation to enable or confer power on the Tribunal to extend a stay order beyond 365 days would be contrary to such statutory provision. While the argument that hardship & injustice will be caused to the assessee by being deprived of the stay even when he is not at fault is appreciated, one cannot ignore the language of the provision (Ronuk Industries 333 ITR 99 (Bom) dissented from).
The judgment of the Karnataka High Court in this case (Ecom Gill Coffee Trading Pvt. Ltd) wherein it was held that the stay granted under s.254(2A) of IT Act, 1961 will have a negative impact on the assessees who have already secured stay from the Tribunals and such stay orders were continuing beyond the 365 day period. Now, taking a cue from this High Court judgment, the department will move the Tribunals to vacate the stay and hear the appeals or some officers may even go to the extent of disregarding all the stay orders passed by Tribunals which continue beyond 365 days and harass the assessees.
The High Court should have noted the spirit behind which the Supreme Court delivered the Judgment in Kumar Cotton Mills Pvt Ltd case (under Central Excise law where the provisions of s.35C(2A) of Central Excise Act, 1944 are pari materia with s. 254(2A) of IT Act, 1961). Supreme Court’s approach to the impugned provision under Excise law was very pragmatic and it observed that the CESTAT’s should extend the stay beyond the period of 180 days only against a good cause and only if the CESTAT cannot hear and dispose of the appeal within the statutorily stipulated period (3 years under excise law).
With thousands of cases pending before the Tribunal it is natural to expect delays in deciding cases and for this the assessees cannot be faulted. The Karnataka High Court should have taken a pragmatic view instead of reading the law as it is. After all matters of statutory appeal, stay and procedures related thereto are not substantial laws to be read in a stricter sense. It is procedural law and has to be applied with more pragmatism.