Limitation in service tax appeals cannot defeat a bona fide case where merits require reconsideration.

An appeal under Section 85(3-A) of the Finance Act, 1994 could be filed within two months, with condonation available only for a further one month, so the appellate authority had no power to extend limitation beyond that period. On the facts, however, the delay was treated as bona fide and the underlying service tax demand required examination on merits. The High Court therefore held that the dispute should not be shut out solely on limitation, set aside the order rejecting the appeal, and remanded the matter for fresh adjudication on merits in the interest of justice.

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Issues: Whether the appeal could be entertained despite being filed beyond the statutory period of limitation and whether the order rejecting the appeal on limitation required interference.

Analysis: The appellate remedy under Section 85(3-A) of the Finance Act, 1994 permits filing of an appeal within two months and allows condonation only up to a further period of one month, so the Commissioner (Appeals) had no power to condone delay beyond that limit. However, in the writ proceedings the delay was found to be bona fide on the facts, and the matter involved a claim that the service tax demand itself required examination on merits. In those circumstances, the ends of justice required that the controversy not be shut out solely on limitation.

Conclusion: The writ petition was allowed, the order dismissing the appeal on limitation was set aside, and the matter was remanded for fresh adjudication on merits.

Ratio Decidendi: Where an appeal is rejected solely on limitation despite a bona fide explanation for delay, the High Court may interfere in writ jurisdiction and direct reconsideration on merits in the interest of justice.

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