2014 (8) TMI 653 - HC - Central Excise

Condonation of delay - Inordinate delay of 406 days - Improper advise given by Advocate - Huge amount due on assessee - Held that - as such and so stated in the Affidavit-in-reply filed on behalf of the respondents that as such the authorised person of the Company was the ex-employee of the department and therefore, the contention on behalf of the petitioners that he advised that before filing an appeal, the Company will have to deposit the entire amount of duty and penalty and since the Company was not in a position to deposit the entire amount of duty and penalty, they did not prefer appeal, cannot be accepted and is rightly not accepted by the learned tribunal. At this stage, it is also required to be noted that as such the aforesaid is not supported by any other evidence and/or affidavit of the concerned person. Even the conduct on the part of the petitioners so stated in the Affidavit-in- reply disentitles the petitioners to any discretionary relief in exercise of powers under Article 226 of the Constitution of India. More particularly when there is a huge liability of approximately more than ₹ 8 Crores and even now there is no property of the Company as the same has been sold and alleged to have been purchased by the close relatives of the petitioners and even in the premises of the petitioner No.1 Company, other Companies are running and they applied for Registration Certificate, we see no reason to interfere with the impugned order passed by the learned tribunal - Condonation denied.

Summary

Issues Involved:
1. Refusal to condone the delay of 406 days in filing appeals.
2. Justifiability of the reasons for delay.
3. Conduct and bonafides of the petitioners.
4. Exercise of extraordinary jurisdiction under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Refusal to condone the delay of 406 days in filing appeals:
The petitioners sought to quash and set aside the tribunal's order refusing to condone a delay of 406 days in filing appeals against an order demanding Central Excise Duty liability of over Rs. 8 Crores. The tribunal dismissed the application for delay condonation, citing a lack of justifiable reasons.

2. Justifiability of the reasons for delay:
The petitioners argued that they were wrongly advised by their authorized person, an ex-employee of the department, that the entire duty and penalty amount had to be deposited before filing an appeal. Due to the company's inability to deposit the amount, the appeal was not filed within the limitation period. However, this contention was not supported by evidence or an affidavit from the concerned person. The tribunal and the High Court found this explanation insufficient and not credible.

3. Conduct and bonafides of the petitioners:
The respondents highlighted questionable conduct by the petitioners, including the sale of the company's properties to close relatives and the formation of new companies at the same address to avoid government dues. The petitioners made a false declaration while surrendering their registration certificate, stating no government dues were pending, despite acknowledging the Order-in-Original confirming a duty and penalty of Rs. 8.71 Crores. This conduct was seen as lacking bonafides, further weakening their case for delay condonation.

4. Exercise of extraordinary jurisdiction under Article 226 of the Constitution of India:
The High Court considered whether to exercise its extraordinary jurisdiction under Article 226. Given the significant liability of over Rs. 8 Crores, the sale of the company's properties, and the petitioners' conduct, the court saw no reason to interfere with the tribunal's order. The court suggested that if the petitioners deposited a reasonable amount towards the duty and penalty, their case might be reconsidered. However, the petitioners refused this suggestion, leading the court to dismiss the petition.

Conclusion:
The High Court dismissed the petition, upholding the tribunal's decision not to condone the 406-day delay. The court found no justifiable reasons for the delay and noted the petitioners' lack of bonafides and questionable conduct. The extraordinary jurisdiction under Article 226 was not exercised in favor of the petitioners, given the circumstances and significant government dues involved.