HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Court No. - 10 Case :- CENTRAL EXCISE APPEAL DEFECTIVE No. - 107 of 2015 Appellant :- Commissioner Of Central Excise Respondent :- M/S Barco Electronics Systems Ltd. Counsel for Appellant :- B.K.S.Raghuvanshi,Sr.S.C. WITH Case :- CENTRAL EXCISE APPEAL DEFECTIVE No. - 108 of 2015 Appellant :- Commissioner Of Central Excise Respondent :- Shri Manish Gaur Manager Of M/S Barco Electronics Sys Ltd. Counsel for Appellant :- B.K.S.Raghuvanshi,Sr.S.C. WITH Case :- CENTRAL EXCISE APPEAL DEFECTIVE No. - 109 of 2015 Appellant :- Commissioner Of Central Excise Respondent :- M/S Raja Udyog Pvt. Ltd. Counsel for Appellant :- B.K.S.Raghuvanshi,Sr.S.C. WITH Case :- CENTRAL EXCISE APPEAL DEFECTIVE No. - 110 of 2015 Appellant :- Commissioner Of Central Excise Respondent :- Shri Rakesh Kumar Vohra Counsel for Appellant :- B.K.S.Raghuvanshi,Sr.S.C. WITH Case :- WRIT TAX No. - 389 of 2015 Petitioner :- L.G. Electronics Inida Pvt. Ltd. Respondent :- Commissioner Of Income Tax And 2 Others Counsel for Petitioner :- Suyash Agarwal Counsel for Respondent :- C.S.C. It WITH Case :- WRIT TAX No. - 390 of 2015 Petitioner :- L.G. Electronics Inida Pvt. Ltd. Respondent :- Commissioner Of Income Tax And 2 Others Counsel for Petitioner :- Suyash Agarwal Counsel for Respondent :- C.S.C. IT Hon'ble Arun Tandon, J.
Hon'ble Dr. Satish Chandra, J.
Above mentioned four Excise Appeals have been filed by the Commissioner of Central Excise, Noida while the connected two writ petitions have been filed by the assessee-L.G. Electronics India (P) Ltd.
The department in excise appeals is aggrieved by the order of the Larger Bench of the Central Excise and Service Tax Appellate Tribunal, New Delhi dated 30.09.2014 where-under the Tribunal has held as follows :
"In the light of the analyses above and following the judgment of the Gujarat High Court in Small Industries Development Bank of India reiterated in Disha Engineers and Sharp Engineers, we answer the reference by holding 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 accordance with the observations and directions set out in para 6 of the judgment in Small Industries Development Bank of India, an assessee/appellant in whose favour an order of stay earlier granted stood vacated on expiry of 180 days or 365 days as the case may be, may present an application seeking extension of stay by pleading the necessary facts as would authorize the exercise of discretion by this Tribunal for grant of such extension. The Registry is directed to maintain a separate register to record date with respect to the appeals in which stay has been granted and other appeals where no stay is granted, so as to enable prioritised listing of appeals where stay has been granted, subject to infrastructure and organisational limitations of CESTAT."
In the two writ petitions filed by the assessee, prayer made is 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.
In all the aforesaid matters the crux of the dispute is as to whether (a) after the expiry of the statutory period of 365 days prescribed under Section 35-C (2A) of the Central Excise Act, 1944 (herein after referred to as the 'Act, 1944'), (b) after the expiry of the statutory period of 365 days prescribed under Section 254 (2A) of the Income Tax Act, 1961 (herein after referred to as the 'Act, 1961'), the interim order granted by the Tribunal would stand vacated automatically or there is a power with the Tribunal to extend the interim order, where the appeal could not be heard during these 365 days of its pendency despite all cooperation of the assessee.
Since the issue involved in the aforesaid cases is more or less identical and the language of two sections namely Section 35-C (2A) of the Act, 1944 and Section 254 (2A) of the Act, 1961 are similar, these matters have been clubbed together and are being decided by this common judgment.
We have heard Shri B.K.Singh Raghuvanshi, counsel for the Central Excise Department, Shri Ashok Kumar, Advocate for the Income Tax Department, Shri Rupesh Jain and Shri Suyash Agrawal, Advocates on behalf the petitioner-assessee.
Counsel for the department submitted before us that in view of the mandatory provisions of Section 35-C (2A) of the Act, 1944/Section 254 (2A) of the 1961, in no case the interim stay order granted in favour of the appellant/assessee can be extended beyond 365 days even where the Tribunal because of reasons not attributable to the assessee has not been able to decide the appeal within 365 days. It is, therefore, submitted that the directions issued by the Tribunal quoted herein above permitting the extension of the interim order till the appeal is decided and further granting liberty to the assessees whose interim order stood vacated because of the expiry of the outer limit of 180 days/365 days, to make a fresh interim stay application, is bad.
It is further submitted that the order of the Tribunal is in teeth of the mandatory statutory provisions, therefore, unsustainable in the eyes of law.
On behalf of the Income Tax department similar stand has been taken and it is contended that in view of the language of Section 254(2A) of the Act, 1961, no relief can be granted to the petitioner.
We may record that this High Court 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.
This Court in number of cases has 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. We may refer to one such order passed by the High Court in Central Excise Appeal No. 78 of 2015 (Commissioner Of Central Excise Kanpur Nagar vs. M/s. Annakut Biscuits Co. Ltd.).
The order referred to above, in our opinion, is not a solution to the problem in hand. 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. 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. 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. 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.
A solution has to be found to the problem. Filing of Excise Appeal/writ petition of like nature before the High Court must also be brought to an end inasmuch as the substantial question of law which arises in these Excise Appeals/writ petitions must be answered once and for all.
It is in this background that we proceed to decide the present bunch of appeals/writ petitions.
Section 35-C(2A) of the Central Excise Act, 1944 reads as follows :
"(2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed.
Provided that where an order of stay is made in any proceedings relating to an appeal filed by sub-section (1) of Section 35-B, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order.
Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated."
We may also take note of the third proviso which has been added to Section 35-C(2A) of the Act, 1944 vide Section 98 of the Finance Act, 2013 which reads as follows :
"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 party and on being satisfied that the delay in disposing of the appeal is not attributable to such party, 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."
Section 254(2A) of the Act, 1961 reads as follows :
"In every appeal, the Appellate Tribunal, where it is possible, may hear and decide such appeal within a period of four years from the end of the financial year in which such appeal is filed under sub-section (1) or sub-section 2 or sub-section (2A) of section 253:
provided that the Appellate Tribunal may, after considering the merits of the application made by the assessee, pass an order of stay in any proceedings relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty days from the date of such order and the Appellate Tribunal shall dispose of the appeal within the said period or stay specified in that order :
Provided further that where such appeal is not so disposed of within the said period of stay as specified in the order of stay, the Appellate Tribunal may, on an application made in this behalf by the assessee and on being satisfied that the delay in disposing of the appeal is not attributable to the assessee, extend the period of stay, or pass an order of stay for a further period or periods as it thinks fit; so, however, that the aggregate of the period originally allowed and the period or periods so extended or allowed shall not, in any case, exceed three hundred and sixty-five days and the Appellate Tribunal shall dispose of the appeal within the period or periods of stay so extended or allowed ;
Provided also that if such appeals 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."
From a simple reading of the aforesaid Section 35-C(2A) of the Act, 1944, it is apparently clear that the Appellate Tribunal shall hear and decide every appeal within a period of three years from the date when the appeal is filed. However, the proviso to the said section provides that if the Tribunal has granted an interim order in an Appeal, it will decide the appeal within 365 days at the maximum from the date of the order. In absence of decision within 365 days, the stay order shall stand vacated.
Same is the language of Section 254 (2A) of the Act, 1961.
It cannot be disputed that the intention of the legislature from a simple reading of the sections is that where an interim order has been granted by the Tribunal, the appeal be considered and decided within 180 days at the first instance and in any case within 365 days finally. In case the appeal is not decided by the Appellate Tribunal for whatever reason, the stay order shall stand discharge even if the assessee is not at fault.
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 neminem gravabit). 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.
The Apex Court in the case of Sharif-Ud-Din vs. Abdul Gani Lone reported in AIR 1980 SC, 303 has held as follows :
"In order to find out the true character of the legislature, the Court has to ascertain the object which the provision of law in question is to subserve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any public duty and the invalidation of any act done is disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as a directory one. Where however, a provision of law prescribes that a certain act has to be done in a particular manner by a person in order to acquire a right and it is coupled with another provision which confers an immunity on another, when such act is not done in that manner, the former has to be regarded as a mandatory one."
Maxwell on "Interpretation of Statutes", 10th Ed. p. 381, observed as under :
"On the other hand, where the prescription of a statute relates to the performance of a public duty and where the invalidation of the act done in neglect of them would work serious general inconvenience or injustice to persons who have no control over who have been entrusted with the duty without promoting the social aim of the legislation, such prescription seems to be generally understood as mere instruction for the guidance and governance of those on whom the duty is imposed, or, in other words, as directory only. The neglect of them may be penal in deed, but it does not affect the validity of the act done in disregard of them."
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.
We may not dilate on the issue as to whether the aforesaid Sections 35-C(2A) of the Act, 1944 and Section 256(2A) of the Act, 1961 are mandatory or directory any further.
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 20.09.2014, 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.
In view of the aforesaid conclusions, we dismiss the above mentioned four appeals. The two writ petitions are 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.
Dated :22.04.2015 VR/