2011 (1) TMI 609 - HC - Service Tax

Condonation of delay - Tribunal felt the reason given for condoning the delay do not constitute a sufficient cause and therefore refused to condone the delay and consequently dismissed the appeal - it is clear that there; is demand of payment of tax and for non-payment of tax within the time Stipulated, the appellant/assessee is liable to pay interest, penalty etc.; in accordance with law - it is settled law that an assessee is not liable to pay any tax unless the statute warrants the same, the said question to be gone into by appropriate fourm - it is always open to the respondent/revenue to proceed to recover the amount which is legitimately due in accordance with law - Appeal is allowed

Summary

Issues:
Delay in preferring the original appeal before CESTAT, refusal to condone the delay, challenging the order in Supreme Court, condonation of delay in filing the present appeal, liability to pay tax, recovery of penalty and interest, dispute over liability to pay tax, condonation of delay in both appeals, recovery of legitimately due amount.

Analysis:
The appellant challenged the order passed by CESTAT rejecting the application for condonation of delay in preferring the appeal. The delay of 229 days in filing the original appeal was not condoned by CESTAT, leading to the dismissal of the appeal. The appellant then filed a writ petition and later Special Leave Petitions in the Supreme Court, which were withdrawn. The present appeal was filed with a delay of 395 days. The appellant argued that the Tribunal should have taken a liberal approach in condoning the delay, especially since the service tax due had been paid, and the liability to pay tax was disputed in another pending appeal for the subsequent year.

The counsel for the revenue opposed the condonation of delay, stating that CESTAT rightly declined to condone the delay, and the discretionary orders did not warrant interference. The revenue contended that penalties and interest had not been recovered for over 1.5 years due to the pendency of various matters before different forums. The court noted that although the appellant had paid the entire tax, penalties and interest could still be recovered in accordance with the law. However, since the liability to pay tax was disputed and the matter was already before CESTAT in another appeal, the court emphasized that an assessee is not liable to pay tax unless mandated by the statute.

Considering the nature of the dispute, the amount involved, and the latches on the appellant, the court decided to condone the delay in both appeals and directed CESTAT to restore the appeal to its original file for disposal within three months. The court allowed the appeal by setting aside the order passed by CESTAT and granted the appellant an opportunity to agitate their rights. The court also clarified that the revenue could proceed to recover the legitimately due amount in accordance with the law.

In conclusion, the court condoned the delay in filing the present appeal, allowed the appeal by setting aside the CESTAT's order, and directed CESTAT to dispose of the appeal within three months. The application for stay was dismissed.