2014 (1) TMI 315 - AT - Service Tax

Condonation of delay - Change in opinion - Delay due to analysis of appeal - Held that - there had been an inordinate delay of around 905 days in filing the present Appeal against the Order-in-Original dated 15.10.2008. It is not in dispute that the said Order was communicated in time i.e.on 25.10.2008 to the Applicant and there was no ambiguity in the direction of the confirmation/appropriation of service tax and also imposition of penalty with an option to pay 25% of the penalty amount, if paid within one month from the date of the impugned Order - Applicant chose not to file any appeal against the imposition of the penalty. Later, they had changed their opinion and sought to file the present Appeal against the imposition of penalty - Applicant is a public sector undertaking having full-fledged legal department and they could not properly analyze and understand the simple order of the ld. Commissioner imposing penalty, resulting into the bona fide mistake, in not filing the present Appeal - how a mere change of opinion could be construed as a sufficient cause warranting condonation of delay - Condonation denied.

Summary

Issues:
Delay in filing the Appeal before the Tribunal; Imposition of penalty under Section 78 of the Finance Act, 1994; Condonation of delay of 905 days in filing the Appeal.

Issue 1: Delay in filing the Appeal before the Tribunal

The Applicant, a public sector undertaking, filed a Miscellaneous Application seeking condonation of a delay of 905 days in filing the Appeal before the Tribunal. The impugned Order dated 15.10.2008 confirmed a Service Tax Demand of Rs1,77,48,913/- and imposed a penalty of equal amount under Section 78 of the Finance Act, 1994. The Applicant received the Order on 25.10.2008 but filed the Appeal on 19.04.2011, resulting in the delay. The Applicant claimed that their consultant did not advise them to file the appeal initially, but a subsequent consultant recommended filing an appeal against the penalty. The Tribunal noted that the Applicant did not file any appeal against the penalty initially, despite the clear direction in the Order. The Tribunal found that the Applicant's argument of not understanding the imposition of penalty due to already discharging the service tax was not acceptable, especially considering their legal department's capabilities. The Tribunal, guided by the principle of law from a Supreme Court judgment, dismissed the Miscellaneous Application, Stay Petition, and the Appeal due to the lack of bona fide reasons for the delay.

Issue 2: Imposition of penalty under Section 78 of the Finance Act, 1994

The Commissioner of Service Tax, Kolkata, had confirmed a reduced Service Tax Demand of Rs1,77,48,913/- and imposed a penalty of equal amount under Section 78 of the Finance Act, 1994. The Applicant had paid the service tax and education cess amounts already. The Applicant argued that they were under the impression that no penalty was payable, leading to the delay in filing the Appeal against the penalty. However, the Tribunal found that the Applicant's reasoning for not filing the appeal promptly was not sufficient, especially given their status as a public sector undertaking with a legal department. The Tribunal emphasized that a mere change of opinion was not a valid reason to warrant condonation of the delay. The Tribunal referred to a Supreme Court judgment to support the decision not to condone the delay due to lack of acceptable explanations for the delay.

Issue 3: Condonation of delay of 905 days in filing the Appeal

The Tribunal scrutinized the reasons provided by the Applicant for the delay of 905 days in filing the Appeal against the imposition of penalty. Despite the Applicant's argument regarding not being advised properly by their earlier consultant, the Tribunal found that the Applicant's failure to file the appeal promptly was not justified. The Tribunal highlighted that acceptable explanations and bona fide reasons are required to condone a delay, which were lacking in this case. The Tribunal dismissed the Miscellaneous Application seeking condonation of delay, Stay Petition, and the Appeal based on the lack of merit in the reasons provided by the Applicant.

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