CIT vs. Maruti Suzuki (India) Limited (Delhi High Court)

DATE: (Date of pronouncement)
DATE: February 26, 2014 (Date of publication)

Click here to download the judgement (maruti_suzuki_ITAT_365_days_stay.pdf)

S. 254(2A): The Tribunal has no power to extend stay of demand beyond 365 days even if the assessee is not at fault. If dept seeks an adjournment, ITAT may either refuse it or dept should undertake not to recover the demand

The Tribunal {probably following the Special Bench judgement in Tata Communications 138 TTJ (Mum) 257)} extended the stay beyond 365 days as the assessee was not responsible for the delay in disposal of the appeal. The department challenged the decision of the Tribunal by way of a Writ Petition to the High Court on the ground that after the insertion of the third Proviso to s. 254(2A), the Tribunal had no power to extend stay beyond 365 days even if the assessee was not at fault. HELD by the High Court allowing the Petition:

(i) In view of the third proviso to s. 254(2A) of the Act substituted by Finance Act, 2008 with effect from 1st October, 2008, the Tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay;

(ii) In case default and delay is due to lapse on the part of the Revenue, the Tribunal is at liberty to conclude hearing and decide the appeal, if there is likelihood that the third proviso to Section 254 (2A) would come into operation;

(iii) The third proviso to Section 254 (2A) does not bar or prohibit the Revenue or departmental representative from making a statement that they would not take coercive steps to recover the impugned demand and on such statement being made, it will be open to the Tribunal to adjourn the matter at the request of the Revenue;

(iv) An assessee can file a writ petition in the High Court pleading and asking for stay and the High Court has power and jurisdiction to grant stay and issue directions to the Tribunal as may be required;

(v) Section 254(2A) does not prohibit/bar the High Court from issuing appropriate directions, including granting stay of recovery;

(vii) The constitutional validity of the provisos to Section 254 (2A) of the Act has not been examined and the issue is left open.

Note: The same view has been taken in Ecom Gill Coffee Trading 252 CTR 281 (Kar) while a contrary view has been taken in Tata Communications Ltd 138 TTJ (Mum) 257 (SB) following Ronuk Industries 333 ITR 99 (Bom). In Qualcomm it was held that in view of the conflict of judicial opinion, the view favourable to the assessee had to be followed. See also Shri Jethmal Faujimal Soni vs. ITAT 231 CTR 332 (Bom) where it was held that stay granted matters should not be kept pending. See also Dear Department, Thank You For Giving Us Infinite Stay Of Demand

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