Service tax - limited condonation of delay is permissible by Commissioner (Appeals):

[C.A. DEV KUMAR KOTHARI]

a) Limitation for taking some actions - Under various legal provisions, limitations are prescribed for taking any action by the appellant / respondent, assessee and officers administering the legislation. In some circumstances, the limitation prescribed is absolute and there is no scope of extension of the same. In some circumstances, some relaxation is provided on satisfaction of existence of avoidable reasons or existence of sufficient cause for delay in taking the action.

b) Relaxation in discretion of concerned authority

In some provisions, relaxation is provided to the concerned authority. Sometimes there is no limitation of period prescribed up to which the authority can relax the terms and in some cases a further limitation is imposed and in those cases, the concerned authority can only relax the terms up to such further limitation prescribed for relaxation.

When there is no limitation up to which a relaxation can be made the authority can exercise discretion and in particular circumstances relax the period of limitation even for longer duration if the facts and circumstances so required. However, if there is no reason for such delay in presentation of documents or taking some action, the authority can refuse to allow relaxation of even a few days. In any case the concerned person, who seeks relaxation of limitation, must satisfy the concerned authority about his bona fides, diligence and reasonable cause for not taking action within the prescribed time.

Relaxation when maximum is prescribed

When a maximum period up to which the authority can condone the delay, is prescribed under the law, it can be said that the maximum period up to which one can take the relevant action is prescribed and the authority cannot extend the period beyond the statutory prescribed maximum period for condonation of delay.

Service tax - appeal before Commissioner (Appeals)

In case of appeal before Commissioner (Appeals) in relation to service tax we find that the Commissioner (Appeals) has limited power to condone delay in filing of appeal. The provisions are contained in the Chapter V of Finance Act, 1994 vide Section 85. The said section is reproduced below with highlights and also the foot notes to apprise readers changes which have been made in the section from time to time so that one can easily discern provision which may be relevant in a given case:

Appeals to the Commissioner of Central Excise (Appeals).

85.[(1) Any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals).] **1

(2) Every appeal shall be in the prescribed form and shall be verified in the prescribed manner.

(3) An appeal shall be presented within three months from the date of receipt of the decision or order of 2[such adjudicating authority], relating to service tax, interest or penalty under this Chapter:

Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months.

(4) The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and, subject to the provisions of this Chapter, pass such orders as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty:

Provided that an order enhancing the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement.

(5) Subject to the provisions of this Chapter, in hearing the appeals and making order under this section, the Commissioner of Central Excise (Appeals) shall exercise the same powers and follow the same procedure as he exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944 (1 of 1944).

Notes:

**1. Substituted by the Finance Act, 2005, w.e.f. 13-5-2005. Prior to its substitution, sub-section (1), as amended by the Finance (No. 2) Act, 2004, w.e.f. 10-9-2004, the Finance Act, 2003, w.e.f. 14-5-2003 and the Finance Act, 2001, w.e.f. 16-7-2001, read as under:

 "(1) Any person aggrieved by any assessment order passed by the Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise under section 73, or denying his liability to be assessed under this Chapter, or by an order levying interest or penalty or denying any refund of service tax under this Chapter, may appeal to the Commissioner of Central Excise (Appeals)."

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2. Substituted for "the Assistant Commissioner of Central Excise or, as the case may be, Deputy Commissioner of Central Excise" by the Finance Act, 2005, w.e.f. 13-5-2005. Earlier, the quoted words were substituted for "Central Excise Officer" by the Finance Act, 2001, w.e.f. 16-7-2001.

From reading of the above section and footnotes, we find that so far filing of appeal and condonation of delay is concerned the provisions have remained un-changed. Some changes have taken place in the section in relation to concerned authorities and their designations, etc.

Section provide for limitation to file appeal within three months from date of receipt of order appealed against. The Appellate authority is conferred to condone delay for further three month only. Sub-section (5) makes it clear that the provisions fo Central Excise in relation to appeal are adopted subject to the Chapter. Therefore, provisions which are specifically made in the Chapter V of the FA 1994 relating to service tax shall prevail and the provisions of CE Act shall not be applied where there are specific provision in the Chapter.

Therefore, provision relating to filing of appeal, limitations, orders etc. as stated in S. 85 will prevail and one cannot take recourse to the provisions of CE Act.

Some important cases before CESTAT:

KOUNI TRAVELS PVT. LTD. Versus COMMR. OF SERVICE TAX, BANGALORE 2010 -TMI - 75589 - CESTAT, BANGALORE / 2010 (17) S.T.R. 442 (Tri. - Bang.) was decided on 02 September 2009.

In this case the appeal was dismissed by Commissioner (A) on account of delay, as he did nto find power to condone delay beyond further three months period after end of three months original period allowed statutorily to the aggrieved party to file an appeal.

Any further time within the next three months is condonable if the cause for the delay is explained. The order was received on 10-9-2007 the original three months period ended on 10.12.2007. The further period of three months up to which Commissioner (Appeals) could condone delay ended on 10.03.2008 (as per Commissioner (Appeal) and on 11.03.2008 (as per CESTAT). Because CESTAT took view that for computation of this period one has to exclude the first day of the next block of three months i.e., 11th December was to be excluded so time up to which condonation could be granted is 11.03.2008.

The appeal was received by the Commissioner (A) on 12th March '08, the same was received beyond the condonable period of three months (up tot 11.03.2008 as per CESTAT). Therefore the Commissioner (A) has no powers to condone delay and entertain the appeal filed on 12.03.2008. Accordingly the Tribunal confirmed the order of the Commissioner (Appeals) who did not admit the appeal at all as it was barred.

Tribunal also noted that the Section does not provide a period of six months to file an appeal. An aggrieved party can file an appeal with the Commissioner (A) any time within three months of receipt of an order. The appeal will be entertained if it is otherwise in order. However, if the same is filed beyond the first three months period, then it may not be accepted on record unless the delay is explained to the satisfaction of the Commissioner (A) as was occasioned by sufficient cause. Whereas the first three months is statutorily allowed to the aggrieved party to file an appeal, any further time within the next three months is available if the cause for the delay is explained to the satisfaction of the appellate authority as prescribed and it condones it. Therefore, we find that the appeal period available is not a continuous duration of six months. The further period of three months as per proviso to sub-section (3) of Section 85 has to be computed after the expiry of the first three months a person is allowed in terms of the Section 85(3). This computation will be governed by Section 9 of the General Clauses Act. In the instant case the three months period after receipt of the order by the appellant ended on 10th December '07. The next three months has to be computed by excluding the first day of the next block of three months i.e., 11th December. Further three months therefore ends on 11th March '08. As the appeal was received by the Commissioner (A) on 12th March '08, the same is received beyond the condonable period of three months. Commissioner (A) has no powers to condone any delay beyond the further period of three months which expired on 11th March 2008. We find that the impugned order rightly held the appeal to be barred by limitation. In the circumstances, we sustain the impugned order and dismiss the appeal.

Another case before CESTAT, Chennai -

In Tops Security Ltd. v. CCE, Hyderabad also the same provision of the Finance Act, 1994 S.85 was considered and it was held that Commissioner (A) has no power to condone delay in filing appeal beyond statutory period beyond the maximum period prescribed under the statute which is a settled position of law.The Tribunal also relied and applied earlier decisions in case of Delta Impex v. CCE 2004 2004 -TMI - 47071 - (HIGH COURT OF DELHI) and M. R. Tobacco Pvt. Ltd. v. UOI 2004 2004 -TMI - 47158 - (HIGH COURT OF DELHI).

Learning from these cases:

We learn that timely steps should be taken to file any appeal or petition. It is always preferable to file appeal much before the last date allowed originally. If an appeal is filed before last day, one get benefit of removing technical defect also within time. Suppose last date is 30.03.2010, the appeal is filed say on 15.03.2010 that is fifteen days before the due date. Now suppose any defect is pointed out, and the same is rectified within say ten days from the receipt of the intimation of defect. In such a situation it can also be said that original appeal was filed fifteen days before due date, and time taken to remove defect is only ten days from the intimation of defect, therefore, there is no delay at all. Sometimes, opposite party try to say that removal of defect is beyond limitation period. In such situation an appeal filed before the original due date can provide an extra cautionary measure.

Timely work and health:

It is always better to work regularly and timely. It is noticed that work disposed off timely provide so much relief whereas pending work causes lot of tension and anxiety. Reason for many health problems are related with pending work. While disposing off work one must be reasonably careful and take all cautionary measures but without being too much concerned about full perfections. This is because attempt to achieve full perfection can lead to pending works being piled up without disposal. Even if some imperfection take place, but the work done is by and large satisfactory, then a work disposed off much before the last day is always better option than to work with perfection but belatedly. A delayed action can cause multiplicity of proceedings and uncertainties.