Validity of Stay Order does not expire on passing of 180 days 

AIT News Network

MUMBAI. A recent ruling of CESTAT(Customs Excise & Service Tax Appellate Tribunal) AIT-2006-68-CESTAT  has come as a breather for Central Excise, Customs& Service Tax litigants who were hitherto required to get their Stay Order extended after every 180 days as the Departmental Officers were claiming that the stay order automatically lapsed on expiry of 180 days and non-extension of stay order gave a sword in the hands of the department to recover the demand confirmed by Excise, Customs & Service tax Authorities. The litigants have also been saved from the money paid to their Advocates & Consultants who used to bill them between Rs. 10000 to Rs.50000/- for extension of Stay order depending on the amount involved in the matter.

The Bench ruled as under:

• Validity of a Stay Order does not expire on the passing of 180 days from the date of passing that stay order.  Validity period is as stated in the order itself.  In case variation is required, it is for the revenue to seek modification of the stay order.

• In the present case, our stay order stipulated no time-limit.  Therefore, its validity is till the disposal of the appeals.  Any attempts by the revenue to recover amounts which remain stayed in terms of the Tribunal’s stay order would be contrary to law.  There is no requirement to pass any order extending the stay order already passed and it would remain valid till the disposal of the appeals.

  The Bench relied on a High court ruling wherein it was laid down as under:

  “Section 35C(1) of the Act empowers CESTAT to pass such orders, on an appeal before it, as CESTAT thinks fit.  The said provision confers on CESTAT powers of the widest amplitude in dealing with appeals before it, grants by implication the power of doing all such acts, or employing such means, as are essentially necessary to its execution.  The statutory power under the said section carries with it a duty in proper cases to make such orders for staying recovery of demand of duty, etc. pending an appeal before the Tribunal, as will prevent such an appeal, if successful, from being rendered nugatory.  Sub-section (2A) of the Act was brought on statute book to ensure disposal of pending appeals within a reasonable time frame and curtail delays.  But from this it is not possible to infer a legislative intent to curtail/withdraw powers of the Tribunal to grant stay in appropriate cases.  It is also not possible to infer any curtailment of such powers beyond the period of six months.  The legislature would have specifically provided so if it was so intended.  Any other interpretation of sub-section with both the provisos would frustrate the object of Tribunal dispensing justice in deserving cases where the assessee is not at fault in any manner; the assessee having filed appeal and stay application within period of limitation, prima facie proved his case at hearing and obtained stay with or without conditions, and co-operating with Tribunal for hearing and disposal of appeal; but, the Tribunal is not in a position to proceed for various reasons.”

  Sub-section (2A) of Section 35 C of Central Excise Act provides as under:

   “ 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 proceeding relating to an appeal filed under sub-section (1) of section 35B, 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.”  

  ( Click here for full text of ruling AIT-2006-68-CESTAT )