2018 (9) TMI 664 - HC - Service Tax

Maintainability of appeal - Condonation of delay - Whether dismissal of appeal by rejecting the application seeking condonation of delay in filing of appeal in the facts and circumstances of the case and in law could not be countenanced and appeal needs to be restored to the file of the CESTAT for decision afresh affording opportunity of hearing to the appellants to secure the ends of justice? Held that - Admittedly, in the instant case, the appeal was filed well beyond the period of limitation, to be precise, 1557 days after the expiry of the limitation period. Undoubtedly, the Tribunal has power to condone the delay, if sufficient cause is shown by the Assessee. The Tribunal in the impugned order held that the cause shown by the Assessee is neither persuasive nor convincing and the delay being inordinate, rejected the application - The Assessee cannot be left remediless solely on the ground that he has been turned down at the very threshold, that is, at the stage of delay condonation petition. What is important to note from the impugned order is that while dismissing the application for condonation of delay, the Tribunal dismissed the appeal itself. Since the mandatory pre-deposit is paid, the appeal is numbered along with the application to condone the delay and this is precisely the reason why the Tribunal, while rejecting the condonation of delay application, has dismissed the appeal. Therefore, the order passed in the condonation delay petition, in effect, is an order passed in the appeal petition filed by the Assessee challenging the Order-in- Original dated 30.11.2012, and thus, it is a final order for all purposes, as against which, an appeal is maintainable under Section 130 of the Act. The substantial question of law, as framed for consideration, is answered in favour of the Assessee and against the Revenue - appeal allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Maintainability of the appeal before the High Court.
3. Evaluation of the Assessee's claim regarding service tax liability and refund.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The Assessee filed an appeal against the Order-in-Original dated 30.11.2012, confirming a demand of ?47,79,771/- in service tax, along with interest and penalties. The appeal was filed with a delay of 1557 days. The Assessee claimed the delay was due to non-receipt of the order as their business was closed, and the registered premises vacated in May 2012. The Tribunal rejected the application for condonation of delay, noting that the order was served on an ex-employee who later became a Director. The Tribunal found the explanation unconvincing, citing precedents from the Supreme Court, and dismissed the appeal.

2. Maintainability of the Appeal Before the High Court:
The Revenue raised a preliminary objection regarding the maintainability of the appeal, arguing no substantial question of law was involved. The High Court referred to a Division Bench decision from the Kerala High Court, which held that an order dismissing an appeal due to rejection of a delay condonation petition is not appealable under Section 130 of the Customs Act. However, the High Court disagreed, stating that the Tribunal's order dismissing the delay condonation application effectively dismissed the appeal itself, making it a final order appealable under Section 130. The Court emphasized that the question of limitation is a mixed question of law and fact, requiring judicial consideration.

3. Evaluation of the Assessee's Claim Regarding Service Tax Liability and Refund:
The Assessee argued that they had paid a significant amount towards the service tax liability, which should be considered. The High Court noted that the Assessee had indeed paid ?32,18,458/- and admitted further liability of ?9,17,964/-. The Court found that the Assessee was not served with the notice for the personal hearing due to the closure of business, and the ex-employee, who later became a Director, failed to hand over the Order-in-Original timely. The Court also considered a Board's Circular favoring the Assessee and relevant judicial precedents, including the Supreme Court's decision in Commissioner of Central Excise and Customs, Kerala V. L & T Ltd., which clarified that service tax is applicable only to service contracts, not composite works contracts.

Conclusion:
The High Court concluded that the Assessee should not be left remediless due to procedural delays and that the appeal should be heard on merits. The Court condoned the delay, allowed the appeal, and directed the Tribunal to decide the appeal on merits, emphasizing that the law of limitation should not defeat the rights of parties and that there was no evidence of mala fide reasons for the delayed appeal. The decision balanced equities by noting the Assessee's concession to forego any refund claims.