2018 (1) TMI 565 - HC - Service Tax

Condonation of delay in filing appeal - power to condone the delay than what is prescribed under Section 85(3A) of the Finance Act, 1994 - Held that - There can be no quarrel about the legal position that when a statute prescribes a outer time limit for the purpose of condonation of delay then the statutory authority exercising jurisdiction under particular statute cannot suo motu extend the period of limitation prescribed in the statute. This being the settled legal position, it may not be necessary for the Court to refer to the various decisions on the point. Firstly, the petitioner Municipality, a local authority who is vested with a constitutional obligation to take care of the citizens residing in its locality and every service done by the Municipality has an element of public interest attached to it and therefore, some latitude can be granted to such a local authority. Secondly, the petitioner Municipality has paid the entire tax as demanded and also complied with the conditional order passed by this Court at the time of entertaining the writ petition by remitting a sum of ₹ 5 lakhs towards penalty. However, the learned Senior Standing Counsel would submit that it is not clear as to whether the petitioner has paid the entire tax. Thus indulgence is being granted to the petitioner to go before the Appellate Authority to contest the appeal petition on merits as the right of appeal is a very valuable right subject to the condition that the petitioner Municipality pays the entire tax and the payment of ₹ 5 lakhs towards penalty can be reckoned as partial compliance of the order passed by the second respondent. If that be so, till the appeal is heard and decided by the first respondent, further amount of penalty shall not be demanded from the petitioner. Matter is remanded to the first respondent for fresh consideration.

Summary

Issues:
Challenge to order-in-original regarding service tax demand, delay in filing appeal, power to condone delay, public interest consideration, compliance with payment, remand for fresh consideration.

Analysis:
The petitioner, a Municipality, challenged an order-in-original confirming service tax demand for a specific period. The order was received on 22.12.2014, with an appeal period ending on 22.03.2015. However, the appeal was filed on 21.08.2015, beyond the prescribed timeline. The first respondent rejected the appeal citing lack of power to condone the delay beyond statutory limits. The Court acknowledged the statutory limitation but considered the peculiar circumstances. The Municipality, fulfilling its public duty, paid the demanded tax and a penalty of ?5 lakhs. The Court granted leniency, allowing the Municipality to appeal on merits, provided full tax payment, and the penalty was considered partial compliance.

The Revenue's counsel cited a previous case where the petitioner was given a chance to approach a higher tribunal. In this instance, as the First Appellate Authority did not review the Assessing Officer's order, the Court decided to remand the matter for fresh consideration. Consequently, the writ petition was partly allowed, the first respondent's order was set aside, and the case was remanded for reevaluation based on the peculiar circumstances. The Court emphasized that this decision should not set a precedent and no costs were awarded. The connected miscellaneous petitions were closed in light of the judgment.