2014 (9) TMI 151 - HC - Service Tax

Court allows appeal despite delay, quashes order under Finance Act, 1994.

B. SASIKUMAR Versus COMMR. OF C. EX., CUS. & SERVICE TAX (APPEALS), COCHIN

The court interpreted Section 85(3) of the Finance Act, 1994, allowing a two-month appeal period for adjudication orders on service tax, interest, or ... Condonation of delay for filing an appeal before Commissioner (appeals) - delay of three months and 23 days - Ext. P1 order saddling him with the liability to pay service tax erroneously states that an appeal can be preferred within a period of three months from the date of receipt of the order. The petitioner contends that he was guided by the said statement in Ext. P1 order and that was why he preferred an appeal within the condonable period of one month after the said period of three months. - Held that:- the petitioner should not suffer due to a fault on the part of the adjudicating authority even though Ext. P2 order of the first respondent is well founded on the basis of the statutory provisions. - delay condoned - this judgment shall not be treated as a precedent at all. - Decided in favor of assessee. Issues:1. Interpretation of Section 85(3) of the Finance Act, 1994 regarding the time period for filing an appeal against an order of adjudication relating to service tax, interest, or penalty.2. Consideration of delay in filing the appeal beyond the condonable period.3. Impact of erroneous statement in the adjudication order on the appellant's filing timeline.4. Judicial discretion in quashing the order and directing a fresh hearing on merits.5. Timeframe for the first respondent to pass final orders on the appeal.Issue 1: Interpretation of Section 85(3) of the Finance Act, 1994The judgment addresses the provision of Section 85(3) of the Finance Act, 1994, which allows a two-month period for filing an appeal against an order of adjudication concerning service tax, interest, or penalty. It clarifies that any delay in filing within one month after the two-month period can be condoned. The petitioner filed the appeal after three months and 23 days, exceeding the condonable period.Issue 2: Consideration of Delay in Filing the AppealDespite the delay in filing the appeal, the petitioner argued that an erroneous statement in the order misled them into believing they had three months to appeal. The court acknowledged the petitioner's contention that they acted within the condonable period of one month after the supposed three-month deadline, attributing the delay to difficulties in collecting necessary records for the appeal.Issue 3: Impact of Erroneous Statement in the Adjudication OrderThe judgment highlights the petitioner's reliance on an erroneous statement in the adjudication order, which incorrectly mentioned a three-month appeal period. Despite the order being well-founded on statutory provisions, the court recognized that the petitioner should not be penalized for the authority's error and decided to quash the order in the peculiar circumstances of the case.Issue 4: Judicial Discretion in Quashing the OrderExercising judicial discretion, the court quashed the order and directed the first respondent to hear the appeal on merits, accepting the petitioner's explanation for the delay as non-wilful and attributed to challenges in gathering required records. The judgment emphasized that this decision should not set a precedent for future cases.Issue 5: Timeframe for Passing Final OrdersThe judgment directed the first respondent to finalize the appeal against the initial order within four months, requiring the petitioner to provide a copy of the writ petition with the judgment for compliance. The writ petition was disposed of, concluding the legal proceedings in this matter.