2024 (2) TMI 305 - AT - Service Tax

Commissioner Appeals cannot condone delay beyond 120 days under Section 85 proviso for filing appeals

CESTAT NEW DELHI held that Commissioner (Appeals) lacks competence to condone delay in filing appeals beyond four months (90+30 days) from the original ... Condonation of delay in filing appeal - competence of Commissioner (Appeals) to condone the delay in filing the appeal beyond four months (3+1 months) - HELD THAT:- The review order if is required to be passed in terms of Section 84 the appeal before Commissioner (Appeals) has to be filed within three months from the date of receipt of the order or order of such adjudicating authority which is prayed to be set aside and appeal, if directed under said order has to be filed within one month of the communication of the said order. There is nothing mentioned is Section 84 about power of condonations with Commissioner (Appeals). It is proviso to Section 85 which empowers the Commissioner (Appeals) to condone a period of 30 days (one month) after the expiry of 90 days (3 months). The proviso makes it clear that the Commissioner has no competence to condone the delay beyond 30 days over 90 days. The Hon’ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [2007 (12) TMI 11 - SUPREME COURT] held Plea that , because of lack of experience in business there was delay, is not a adequate reason. Thus, the Commissioner (Appeals) was not competent to condone the delay beyond 30 days over 90 days. In the present case the order-in-original is dated 14.02.2014. Review order is dated 20.05.2014. Thus the review order is not within 3 months as is required under Section 84 of the Act. The said order admittedly was received at Divisional office, Gwalior on 21.05.2014 but the appeal admittedly was filed on 07.07.2014 i.e. much beyond 30 days of receipt of review order and beyond 90+30 days of the order in original. It is already observed above that Commissioner (Appeals) has no statutory power to condone delay in filing appeal before him which is beyond 90+30 days of the communication of order in original. Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Commissioner (Appeals) had jurisdiction to entertain and condone delay in an appeal that was filed beyond the statutorily prescribed period under Sections 84 and 85 of the Finance Act, 1994. 2. Whether the appellate order confirming demand for the extended period (beyond the 'normal period') could stand where the appeal before Commissioner (Appeals) was filed after the maximum period of condonation allowed by statute. 3. Whether, in view of the preceding issues, it is necessary to decide the merits of suppression and liability for the extended period. ISSUE-WISE DETAILED ANALYSIS Issue 1: Competence of Commissioner (Appeals) to condone delay under Sections 84 and 85 Legal framework: Section 84 prescribes review/appellate timelines where a higher officer calls for a record and directs filing an appeal to Commissioner (Appeals) - three months to make the order under sub-section (1) and one month to file the resulting application under sub-section (3). Section 85 prescribes time limits for appeals to Commissioner (Appeals): three months (with a proviso permitting condonation for a further three months) for decisions made before the Finance Bill, 2012 assent; for decisions thereafter, two months plus a further one month condonable under the proviso. The proviso to Section 85 is the statutory source of the Commissioner (Appeals)' power to condone delay and limits the maximum condonable extension to the specific additional period (30 days in the post-amendment scheme, or the one-month/three-month structure depending on the timeline applicable). Precedent Treatment: The Tribunal relied on an authoritative precedent holding that the Commissioner (Appeals) lacks power to condone delay beyond the statutorily prescribed extended period; that precedent was applied to determine the limits of condonation power. Interpretation and reasoning: A joint reading of Sections 84 and 85 shows no independent condonation power in Section 84; condonation is anchored only in the proviso to Section 85 and thereby strictly limited to the statutorily specified additional period. Where an order under Section 84 is required (i.e., a review order directing an appeal), the timelines under Section 84 (three months to make the order; one month to file the appeal pursuant to that order) must be respected. The Tribunal observed that the proviso to Section 85 does not empower the Commissioner (Appeals) to extend time beyond the aggregate maximum (90 + 30 days in the statutory scheme addressed), and any appeal filed after that period is incurably barred for want of jurisdiction of the Commissioner (Appeals) to condone further delay. Ratio vs. Obiter: Ratio - The Commissioner (Appeals) has no jurisdiction to condone delay beyond the maximum period expressly allowed by the proviso to Section 85; therefore appeals filed after that maximum period result in appellate orders that are without competence. Obiter - Observations as to particular computations of days in different factual permutations are ancillary to the legal conclusion but follow directly from the ratio. Conclusions: The Tribunal concluded that the Commissioner (Appeals) was not competent to condone the delay in the instant matter because the appeal was filed beyond the maximum condonable period under the statutory scheme. Consequently, the impugned appellate order was without jurisdiction and liable to be set aside. Issue 2: Effect of lack of competence on confirmation of demand for extended period Legal framework: Jurisdictional competence is a threshold issue; an appellate order rendered without jurisdiction is void insofar as it attempts to alter or confirm the adjudicating authority's decision beyond what law permits. Where the appellate forum lacks competence to entertain the appeal, the original order remains undisturbed to the extent it was validly confirmed. Precedent Treatment: The Tribunal applied the principle from the cited higher-court authority that where the statutory time-limit for condonation is exceeded, the appellate authority cannot validate belated appeals and any resulting appellate order is void for want of jurisdiction. Interpretation and reasoning: Since the appeal in question was filed beyond the statutory maximum period (calculated from the date of the order in original and the subsequent review order), the Commissioner (Appeals)'s adjudication on the merits (including confirmation of demand for the extended period) cannot stand. The Tribunal therefore refrained from deciding the underlying factual/merit contentions (such as suppression or liability for the extended period), treating the jurisdictional defect as dispositive. Ratio vs. Obiter: Ratio - An appellate order confirming demands for periods covered by an appeal filed after the maximum condonable delay is invalid for want of jurisdiction, and the original order's findings for the normal period remain operative. Obiter - Remarks that the assessee admitted liability for the normal period and contentions about suppression are left undecided because jurisdictional infirmity was dispositive. Conclusions: The impugned appellate order confirming the entire demand (including extended period) was set aside for lack of competence of the Commissioner (Appeals). The demand confirmed by the original authority for the normal period remains in effect; the appellate confirmation of extended-period demand cannot be sustained. Issue 3: Necessity of addressing merits (suppression and liability for extended period) Legal framework: When a jurisdictional defect nullifies appellate proceedings, there is no need to adjudicate merits that the appellate authority reached without jurisdiction; questions of suppression and extended liability are properly left to be re-litigated before a competent forum if statute permits. Precedent Treatment: The Tribunal followed established procedural principles that jurisdictional deficiencies obviate the need to decide merits in the impugned appellate order and mandate restoration of the operative effect of the original order. Interpretation and reasoning: The Tribunal observed the appellant had acknowledged liability for the normal period and contested the extended period; however, because the Commissioner (Appeals) lacked power to condone the delay and hence to decide the appeal, the Tribunal declined to adjudicate on suppression or substantive liability for the extended period and confined relief to setting aside the appellate order. Ratio vs. Obiter: Ratio - A court or tribunal need not decide substantive merits where the appellate order attempting to decide them is void for want of jurisdiction. Obiter - Comments that the original authority had accepted no suppression for the normal period are factual observations not forming part of the decisive legal holding. Conclusions: The Tribunal did not decide merits regarding suppression or extended-period liability because the appellate order was void for lack of jurisdiction; the original authority's confirmation for the normal period survives, and the appeal is allowed to the extent of setting aside the impugned appellate order.