What has brought to fore this issue is that in a very recent judgement in March this year the Allahabad High Court has given stricture to an officer of Revenue Department in relation to a case1 involving stay which was given by the Tribunal in the background of the existing legal provision in the Central Excise Act as in Section 35C(2A). I am not discussing here whether the strictures was to be given or not because there were some other reasons also for the stricture. I am only on the legal point as to whether stay can be extended by the Tribunal beyond the period of 180 days from the date of the stay. The statutory provision is the following: "...and if such an appeal is not disposed of within the 180 days , the stay order shall , on the expiry of that period stand vacated ".
This subject earlier was interpreted by the Tribunal to the effect that it can give further stay after 180 days. When Revenue went to the Supreme Court2 arguing that against the specific provision of law, any extension of stay could not be given, the Supreme Court did not agree but at the same time held that the reason for further extension must be only unavoidable administrative delay on the part of the Tribunal and not of the assessee. If it is not the assessee's fault, then he deserves extension. So it is a conditional affirmation of the view that extension can be given even against specific provision.
What I am writing in this treatise is that this judgement interprets the law such that it makes the provision in Section 35C(2A) a nullity. There are a very large number of judgements which say that no part of a statute should be interpreted in such a way that it becomes redundant or a nullity. I am quoting only two of the recent ones . In one case 3 the Supreme Court has held that Section 28(1) of the Customs Act cannot be interpreted in such a way that it makes the provision redundant. In another case4 under Section 135(1)(a) of the Customs Act, the issue was the following: Under the Customs (Compounding of Offences) Rules, 2005, while it was provided that the penalty in compounded cases under the above Section, could be 'upto twenty percent of market value of the goods or rupees ten lakh whichever is higher'. A penalty of rupees ten lakh was imposed by the adjudicator. The assessee argued that the market value being about 8 lakh, the twenty percent of that would be a much smaller amount than ten lakhs. The Supreme Court held that if this interpretation was accepted, then the expression 'whichever is higher' would become redundant. The Supreme Court rejected the petitioner's plea on this ground and upheld that Rs.10 lakhs has been within the legal limit.
The conclusion from all the above judgements is clear that no part of the statute or an exemption is to be interpreted so as to render it as redundant or nullity. It has now become an well accepted principle of interpretation of statue.
In this particular judgement2 of the Supreme Court has not cited any judgement of the Supreme Court whatsoever on this issue. Not has it given any reason why the well accepted principle of interpretation should be summarily ignored. To this extent it has a less precedent value than all the other judgements on the subject of whether an interpretation can reduce a part of a statute as nullity.
The purpose of this amendment as per Section 2A of Section 35C of the Central Excise Act was to ensure that huge amount of arrear of revenue does not remain unrealised for a long time. This public good purpose has been reduced to nullity. To remedy the situation, it is necessary to further amend the law by insertion of another proviso that no further extension can be given under any circumstances. It is not unjust against the assessee because the Tribunal can always decide the case quickly even after the prescribed period is over.
References:
Galaxy Indo Fab Limited vs. Union of India - 2010(252)ELT3(All.)
2 Commissioner of Cus.&C.Ex., Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd. - 2005(180)ELT434 (SC)
3 Venus Enterprises v. Commissioner - 2007(209)ELTA61(SC)
4 Rajesh Kumar Sharma vs Union of India - 2007(209)ELT3(SC)
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