2023 (12) TMI 605 - AT - Service Tax

Appeal Remand: Tribunal Orders Rehearing Due to Improper Rejection on Limitation Grounds, Citing COVID-19 Exclusions.

M/s. Galaxy Ratlam Vehicles Pvt. Ltd. Versus Commissioner of Central GST & Central Excise, Ujjain (M.P.)

The Tribunal remanded the case to the Commissioner (Appeals) after determining that the appellant's appeal was improperly rejected on limitation grounds. ... Delay in filing of appeal or not - service of the order - time limitation - appeal rejected on the ground of being filed much after a period of 60 + 30 days from the date of receipt of the Order-in-Original - Recovery of service tax alongwith interest -HELD THAT:- The Order-in-Original dated 28.07.2020 was served upon the appellant by two different modes one by speed post which apparently has not returned back ‘undelivered’; two that the order was delivered to one of the employee of appellant namely Shri Prateek Rao. He admittedly is the employee of appellant as service supervisor. It is opined that issuance of copy of order by speed post does not amount to service thereof as such because it will be mere dispatch of the order - No doubt in section 37C, speed post is the mode of service but proof of dispatch is still mandatory. In the absence of proof of receipt of the O-I-O to the appellant sent by speed post, the same cannot be held to have been served. Shri Prateek Rao, who admittedly received the order is an employee of the appellant in their workshop. In addition, ld. CA has placed on record an affidavit of Shri Prateek Rao, wherein he deposed that he received notice but he failed to bring it to the notice of the appellant. The contents of said affidavit are fully corroborated by partner of the appellant, Shri Abbas Ali Ghasswala - It gets clear from the affidavits that the Order-in-Original could never be brought to the notice of the appellant. It is only from the recovery notice dated 23.02.2023, the appellant acquired knowledge about the Order-in-Original dated 28.07.2020. On the very next day, appellant applied for the copy of the said order and not in later than 10 days of getting the copy of the impugned order, appeal has been filed. The present appeal shall not be thrown at the threshold and shall be decided on the merits of the case - this is a fit case to be remanded to the Commissioner (Appeals) with the direction to decide the appeal on merits of the case after giving reasonable opportunity of hearing to the appellant - appeal is allowed by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether the appeal before the Commissioner (Appeals) was barred by limitation where the Order-in-Original was dated 28.07.2020 but the assessee contends it did not receive the order until receipt of a recovery notice on 23.02.2023. 2. Whether service of the Order-in-Original by speed post or on an employee of the assessee (service supervisor) constituted valid service under the statutory scheme (section 37C and section 85 / relevant provisions), thereby triggering the limitation period from the date of dispatch/receipt by that employee. 3. Whether the period of the COVID-19 pandemic should be excluded in computing limitation for filing the appeal. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Limitation: commencement of limitation where actual notice disputed Legal framework: Limitation for filing an appeal to the Commissioner (Appeals) under the service tax/Finance Act regime is two months from the date of receipt of the Order-in-Original (statutory commencement linked to receipt, not merely date of order). Precedent treatment: The Court noted the Supreme Court direction in Writ Petition (C) No.3 of 2020 (regarding exclusion of COVID-19 period) as relevant to limitation computation; no other precedents were relied upon or overruled. Interpretation and reasoning: The Tribunal held that the statutory two-month limitation runs from receipt of the Order-in-Original by the assessee. The Tribunal accepted appellants' evidence that the Order-in-Original did not come to the attention of the assessee until the recovery notice dated 23.02.2023, and that upon receipt they promptly sought and obtained a copy and filed the appeal within the permissible period counted from that date. Ratio vs. Obiter: Ratio - limitation begins from receipt by the assessee; where the assessee did not receive or have notice of the order, the limitation period did not start to run, and the appeal cannot be treated as time-barred. Obiter - general remarks on the sufficiency of dispatch proof (see Issue 2) are ancillary. Conclusions: The Tribunal concluded that the appeal could not be rejected as time-barred on the premise that the assessee only acquired knowledge of the order upon receipt of the recovery notice; the appeal was therefore not barred when filed as soon as the assessee obtained the order. Issue 2 - Validity of service by speed post and service on employee (statutory compliance) Legal framework: Section 37C (Central Excise Act, 1944) and provisions governing service (and section 85 of Finance Act, 1994 as to reckoning limitation) set out modes and requirements for service of orders; proof of dispatch and proof of receipt are significant in determining service. Precedent treatment: The Tribunal treated statutory provisions as requiring not merely dispatch but proof of receipt to establish service for limitation purposes; no precedent was treated as overruling this requirement in the present record. Interpretation and reasoning: The Tribunal distinguished between mere dispatch (speed post) and effective service. It held that proof of dispatch alone does not amount to conclusive service because dispatch is merely evidence of sending; receipt by the assessee (or proper representative) is essential to trigger the limitation period. Further, where service was effected on an employee (a service supervisor) who admitted receipt but deposed by affidavit that he failed to bring the order to the attention of the assessee, such receipt did not equate to the assessee having been put on notice. The Tribunal accepted corroborating affidavits that the order was not brought to the attention of the management, concluding that constructive service via the employee did not operate to start limitation in the factual matrix of this case. Ratio vs. Obiter: Ratio - proof of mere dispatch by speed post is insufficient without proof of receipt by the assessee; receipt by an employee who fails to bring the order to the attention of the assessee does not establish effective service for limitation purposes where affidavits and facts show the assessee lacked knowledge. Obiter - observations on the statutory modes of service and the interplay of section 37C and section 85 beyond the facts are advisory. Conclusions: The Tribunal found infirmity in treating the Order-in-Original as served merely because it was dispatched by speed post or because an employee received it; on the material before it (affidavits admitting receipt but not onward communication), the order had not been effectively served on the assessee so as to start limitation. Issue 3 - Effect of COVID-19 pandemic on limitation computation Legal framework: Directions of the Supreme Court in Writ Petition (C) No.3 of 2020 contemplated exclusion of certain pandemic periods from computation of limitation in judicial and quasi-judicial proceedings. Precedent treatment: The Tribunal accepted those directions as applicable to the period after the Order-in-Original and considered their bearing on limitation calculation. Interpretation and reasoning: While the primary basis for relief was non-receipt of the Order-in-Original, the Tribunal noted that a significant portion of the post-order period coincided with the pandemic phase and was subject to exclusion as per the Supreme Court direction, reinforcing the conclusion that limitation could not be mechanically applied from the date of the Order-in-Original. Ratio vs. Obiter: Ratio - where pandemic exclusion applies, the excluded period must be factored into limitation computation. Obiter - comments on interaction with service evidence are supplementary. Conclusions: The pandemic exclusion supported the view that limitation should not be held to bar the appeal in the circumstances; together with non-receipt, it weighed against dismissal on limitation grounds. Relief and procedural direction Interpretation and reasoning: Given the factual findings on defective service/absence of effective receipt and the applicability of pandemic exclusion, the Tribunal considered it appropriate that the appeal be adjudicated on merits rather than disposed of on a preliminary limitation ground. Conclusions: The Tribunal set aside the rejection for limitation and remanded the matter to the Commissioner (Appeals) to decide the appeal on merits after providing reasonable opportunity of hearing to the assessee, with directions to decide within four months from receipt of the Tribunal's order.