 "Lateral thinking will eliminate pending stay petitions in CESTAT")
The issue of disposing of stay petitions in the Tribunal for Customs, Excise and Service Tax (CESTAT) has attained critical significance due to extreme pressure from the department to realise revenue. When an appeal has been filed and no stay has been given, revenue presses the party to pay, even if the merit is not on the side of the revenue. Once paid, refund is most unlikely, as there will be a question about unjust enrichment. So, it is important to examine the issue of pendency of stay petitions separately independently of the general pendency.
While welcoming the new president of CESTAT on April 6, 2013, president of CESTAT Bar Association R K Jain said more than 75,000 general cases were pending and stay petitions were more than 11,000. The effect of pendency is so crippling that the Karnataka High Court has ordered the government to create new benches immediately.
My view is that increasing the number of benches can only solve the problem marginally. Unless the rate of disposal of stay petitions becomes more than the rate of receipt, the problem will never be solved. So, we must do some lateral thinking to increase disposals.
The government has been rather pusillanimous about granting the power to decide cases to a single bench. It is limited to Rs 50 lakh, if valuation or classification is not involved. Where classification or valuation issues are involved, even a case of Rs 5,000 is decided for giving stay by a bench of two members. Most cases are of this category. So the misery continues.
In this context, one must understand a few things. Stay is not a final decision. It is only an interim decision where there is a prima facie case for the tax payer. Merely for this, if the time of a division bench is devoted, little time is left for deciding cases finally. A prima facie case can surely be decided by a single member. And this, in no way, affects the final decision which will be given by a division bench. It is only for an interim period that the stay is valid. The time is maximum 180 days and usually about three months. So, the risk to revenue is not there particularly, if the chief departmental representative in the CESTAT keeps a tab on cases where stay has been given but final decision is not forthcoming.
There is a very practical difficulty about forming a division bench in places where there is only one bench. Usually, one member is present always but the second member is not available for various reasons. He may not have joined because it does not suit him. He may have taken leave because his family is elsewhere and so on. These are not imaginary examples. Not having a full bench stops all cases of stay for quite long. It is common that stay petitions have not come up for more than a year.
So, my first and most important suggestion is that all cases of stay petitions, irrespective of issues involved, should be allowed to be decided by single bench in regard to stay matters. There may a limit of Rs 5 crore.
My second suggestion is that bunching of files should be done both by the CDR and by the registry of the CESTAT. One decision will dispose of scores of cases.
Third, the hearings should be fixed on first-come-first-serve basis.
Fourth, all compliance matters should be dealt with by the registrar. Only non-compliance can be reported to single bench.
Fifth, where party has paid duty voluntarily after detection, the issue remains only for imposing penalty. Such cases can be dealt with by single bench. This suggestion will not be necessary, if the first one is accepted.
Last but not the least, CBEC should allow departmental representatives to concede that there is a prima facie case. This does not bind the department in the final decision. We must remember that 85 per cent cases are lost by revenue in the CESTAT. So why fight tooth and nail even in stay petitions?
While welcoming the new president of CESTAT on April 6, 2013, president of CESTAT Bar Association R K Jain said more than 75,000 general cases were pending and stay petitions were more than 11,000. The effect of pendency is so crippling that the Karnataka High Court has ordered the government to create new benches immediately.
My view is that increasing the number of benches can only solve the problem marginally. Unless the rate of disposal of stay petitions becomes more than the rate of receipt, the problem will never be solved. So, we must do some lateral thinking to increase disposals.
The government has been rather pusillanimous about granting the power to decide cases to a single bench. It is limited to Rs 50 lakh, if valuation or classification is not involved. Where classification or valuation issues are involved, even a case of Rs 5,000 is decided for giving stay by a bench of two members. Most cases are of this category. So the misery continues.
In this context, one must understand a few things. Stay is not a final decision. It is only an interim decision where there is a prima facie case for the tax payer. Merely for this, if the time of a division bench is devoted, little time is left for deciding cases finally. A prima facie case can surely be decided by a single member. And this, in no way, affects the final decision which will be given by a division bench. It is only for an interim period that the stay is valid. The time is maximum 180 days and usually about three months. So, the risk to revenue is not there particularly, if the chief departmental representative in the CESTAT keeps a tab on cases where stay has been given but final decision is not forthcoming.
There is a very practical difficulty about forming a division bench in places where there is only one bench. Usually, one member is present always but the second member is not available for various reasons. He may not have joined because it does not suit him. He may have taken leave because his family is elsewhere and so on. These are not imaginary examples. Not having a full bench stops all cases of stay for quite long. It is common that stay petitions have not come up for more than a year.
So, my first and most important suggestion is that all cases of stay petitions, irrespective of issues involved, should be allowed to be decided by single bench in regard to stay matters. There may a limit of Rs 5 crore.
My second suggestion is that bunching of files should be done both by the CDR and by the registry of the CESTAT. One decision will dispose of scores of cases.
Third, the hearings should be fixed on first-come-first-serve basis.
Fourth, all compliance matters should be dealt with by the registrar. Only non-compliance can be reported to single bench.
Fifth, where party has paid duty voluntarily after detection, the issue remains only for imposing penalty. Such cases can be dealt with by single bench. This suggestion will not be necessary, if the first one is accepted.
Last but not the least, CBEC should allow departmental representatives to concede that there is a prima facie case. This does not bind the department in the final decision. We must remember that 85 per cent cases are lost by revenue in the CESTAT. So why fight tooth and nail even in stay petitions?
Conclusion: We should free the division benches from hearing routine cases and stay petitions.
Email: smukher2000@yahoo.com