2018 (5) TMI 1836 - HC - Service Tax

Condonation of delay in making pre-deposit - Section 35G of the Central Excise Act 1944 read with Section 83 of the Finance Act 1994 - application for restoration of appeal - Held that - In the present case also the order dated 28-1-2008 was passed directing the appellant to deposit 50% of the tax demand. Compliance was mandatory. Against the stay order dated 28-1-2008 the appellant filed writ petition No. 3673/2008 before this Court and the same was dismissed on 10-7-2008 while granting further 8 weeks time to make the pre-deposit as directed by the Tribunal and they were granted further extension of time of six weeks vide order dated 9-9-2008 to make the pre-deposit. However the appellant did not deposit the amount rather it moved a modification application before this Court which was dismissed as withdrawn vide order dated 24-11-2008. Thereafter the appellant moved the modification application before the Tribunal which was dismissed on 17-3-2009. Against the said order the appellant filed an appeal on 6-5-2009 before the Supreme Court - During the pendency of the appeal before the Supreme Court the Tribunal vide order dated 8-5-2009 dismissed the appeals of the appellant for failing to comply with its order dated 28-1-2008. After that the appeal before the Supreme Court was dismissed in default on 13-7-2009 in consequence whereof the aforesaid orders had somewhat merged into the order of the Supreme Court. The appellant woke up from its slumber after 51/2 years and deposited the amount on 20-3-2015 in both the cases and moved applications in July 2016 before the Tribunal to recall its dismissal in default s order dated 8-5-2009 - There is virtually no explanation or sufficient cause for not complying with the orders dated 8-5-2009 28-1-2008 and during the extended period granted vide order dated 9-9-2008 for almost 6 years. The conduct of the appellant again demonstrates lack of bona fides on their part. Delay in deposit of 5 1/2 years is substantial. Thereafter they did not move any application for almost 16 months to recall the final order dated 8-5-2009 of Tribunal after the deposit of the part of the amount on 20-3-2015. There has been unexplained delay in depositing the amount and not moving the applications within the stipulated time. The delay of almost 6 years in depositing the amount and thereafter delay of 16 months of moving an application before the Tribunal cannot be condoned on vague assertions. Restoration of appeal - Held that - Whether the appellant has a very good case or not mere recoveries/deposit of amount after years cannot allow a party to move an application for the restoration of the appeal. Such a conduct cannot be permitted for maintaining the judicial discipline. The delay is condonable when sufficient cause is shown. Explanation should be from the last day of limitation. Appellant must show diligence and bona fides and not inaction or negligence. Condoning such delays would make the proceedings interminable and would legalize injustice. Compliance of orders and time limit is the norm and mandate. If a party comes with a plea which shows its inaction casual approach as well as its lack of bona fide then its claim must be rejected - Mere payment cannot result in restoration of appeal by moving an application where there has been an unexplained delay. There is no reason to interfere with the orders of the Tribunal dated 11-4-2017 dismissing the applications of the appellant to restore the appeals - appeals dismissed.

Issues Involved:
1. Condonation of delay in filing appeals.
2. Restoration of Service Tax Appeals dismissed for non-compliance with pre-deposit orders.
3. Classification of services provided by the appellant as cargo handling services.
4. Compliance with judicial orders and procedural delays.

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The appellant sought condonation of a 115-day delay in filing appeals under Section 151 of the Code of Civil Procedure, 1908. The delay was attributed to the appellant's initial filing of an appeal in another forum, which was dismissed, allowing the appellant to withdraw with liberty to agitate the matter appropriately. The court condoned the delay, recognizing the appellant's bona fide action in initially approaching the wrong forum.

2. Restoration of Service Tax Appeals:
The appellant's Service Tax Appeals were dismissed by the Tribunal for non-compliance with a stay order directing a 50% pre-deposit of the adjudicated demand. Despite extensions granted by the High Court, the appellant failed to comply within the stipulated time. The Tribunal dismissed the appeals on 8-5-2009, and the appellant's subsequent appeal to the Supreme Court was dismissed in default on 13-7-2009. The appellant later deposited the entire tax component and sought restoration of the appeals, which the Tribunal dismissed on 11-4-2017. The High Court upheld the Tribunal's decision, emphasizing the appellant's gross negligence and lack of bona fides in delaying compliance and filing restoration applications.

3. Classification of Services Provided:
The appellant, a partnership firm engaged in packaging and bundling of iron and steel products within Bhilai Steel Plant, was alleged to have provided cargo handling services taxable under Section 65(105)(zr) read with Section 65(23). The Additional Commissioner confirmed the demand along with interest and penalties, a decision upheld by the Commissioner (Appeals) and the Tribunal. The appellant contended that their activities did not constitute cargo handling services, but this argument was not accepted by the authorities.

4. Compliance with Judicial Orders and Procedural Delays:
The appellant's repeated failures to comply with judicial orders, including the Tribunal's stay order and subsequent extensions granted by the High Court, demonstrated a lack of diligence and bona fides. The court cited the case of Golden Tobacco Limited, emphasizing that liberal construction of "sufficient cause" for condonation of delay is only applicable when there is no negligence, inaction, or lack of bona fides. The appellant's conduct, including a significant delay in depositing the required amount and moving for restoration, was deemed unacceptable, leading to the dismissal of their appeals.

Conclusion:
The High Court dismissed the appeals, affirming the Tribunal's decision to refuse restoration due to the appellant's gross negligence and lack of bona fides. The court underscored the importance of compliance with judicial orders and timely action in legal proceedings, rejecting the appellant's arguments for condonation of delay and restoration of appeals.

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