The proposed Section 35F compels an assessee to have endless thoughts and hence I have tried to deal with some of them as below:
Query 1(a) Whether an assessee is supposed to file a stay application along with an appeal before CESTAT?
Answer: Yes it is still required to be filed before appellate authorities. However, in budget speech Honourable Finance Minister has stated that
252. To expedite the process of disposal of appeals, amendments have been proposed in the Customs and Central Excise Acts with a view to freeing appellate authorities from stay applications and to take up regular appeals for final disposal.
Whereas, even though stay application wont be heard then too stay application is required to be filed in terms of sub section (7) of Section 35 B of CEA,1944 which is produced herein below:
(7) Every application made before the Appellate Tribunal, —
(a) in an appeal for grant of stay or for rectification of mistake or for any other purpose; or
(b) for restoration of an appeal or an application,
shall be accompanied by a fee of five hundred rupees:
Unfortunately, the said provision was not amended in the current budget and hence stay application is still required to be filed with appropriate fees in CESTAT.
Query 1(b) How appeals and stay applications filed after enactment of Section 35F shall be dealt by appellate authorities?
Answer : It is a dicey situation especially when the following crucial aspect exists as below:
- filing of stay application a compulsion under sub section (7) of Section 35B of CEA,1944 and if not filed then it will lead to deficiency
- any application if filed is required to be disposed and
- mandatory pre-deposit for getting an appeal entertained
Under such situation, I feel that henceforth, the Registrar of CESTAT will do something at par i.e
- to check the compliance of mandatory deposit under proposed Section 35F and
- to dispose stay application filed under 35B (7 )
by way of issuance an order for admission of an appeal and thereby it shall be construed as disposal of stay application as well.
In a case, where compliance of mandatory amount is not reported, it shall pass an order for non-admission of an appeal.
Query 2: Whether extension of stay will be required for new appeals and stay application filed after the enactment of proposed Section 35F?
Answer: No , it will not be required in as much as the first, second and third provisions under sub-section (2) of Section 35C will be omitted with the enactment of new provisions of finance bill 2014. Therefore, vacation of stay under 180 days & another 365 days factor to decide an appeal will be talk of the past only.
In addition to the aforesaid, even otherwise, stay applications wont be heard as narrated in query 1(a).
Query 3: Whether the pending stay applications and appeal will have to follow the existing section 35F?
Answer: The answer is Yes. Since, the proposed section will not be applicable to stay applications and appeals filed and/or pending before the enactment of new Section 35F.
Therefore, any extension applications filed before the enactment of proposed Section 35F will be the last, in an appeal pending before the enactment, in as much as the extension order passed, even after the enactment, will be valid till disposal of an appeal due to the amendment in Section 35C as already explained in query 2.
Query 4 : Whether an amount deposited during an investigation, after the issuance of a show cause notice or any other time before the order of non appellate authority will be sufficient for the purpose of mandatory deposit under the proposed Section 35F?
Answer : Yes. It shall be valid as the proposed Section 35F does not speak for fresh deposit in addition to the deposits made during an investigation, after the issuance of a show cause notice or any other time before the order of non appellate authority. However, if the total amount thus deposited is lesser to 7.5% and/or 10%, the difference amount needs to be deposited so that it becomes total of 7.5% and /or 10% at respective appellate levels.
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