2025 (3) TMI 1351 - AT - Service Tax

Appeal not time-barred despite exceeding two-month limit under Section 85(3A) Finance Act 1994

M/s Harshit Sanwal & Others Versus Commissioner of Central Goods And Service Tax and Central Excise, Dehradun - Uttarakhand

CESTAT New Delhi held that appellant's appeal was not time-barred despite being filed beyond the prescribed two-month period under Section 85(3A) of ... Dismissal of appeal as time barred having been filed after more than one month beyond the period of two months prescribed in Section 85(3A) of the Finance Act, 1994, which cannot be condoned - whether delay in filing the appeal before the Commissioner (Appeals) being beyond the period of 2+1 month can be condoned or not? - HELD THAT:- The appellant bonafide prosecuted the appeal before Meerut Division within the extended period of one month by filing the appeal on 07.07.2017, however on 11.07.2017 the appellant was intimated that the appeal filed before the Meerut Division cannot be transferred internally to Dehradun Division, therefore, the said period needs to be excluded. Further, the appellant diligently prosecuted the appeal by making the pre-deposit amount after seeking due clarification from the department. Here also, the letter dated 14.04.2017 by the appellant was replied by the Department vide letter dated 16.05.2017. The delay in responding to the letter by the Department by almost one month cannot be attributed to the appellant. Therefore, the test laid down under the provisions of Section 14 are fully satisfied. Without going into too many details, if the limitation is computed from the date of the receipt of the order, i.e., 12.04.2017 till the date of filing of the appeal before the Dehradun Division on 13.07.2017, the total period comes to 91 days as against 90 days and if the period before the Meerut Division from 7.07.2017 to 11.07.2017 is excluded by virtue of the provisions of Section 14 of the Limitation Act, the appeal filed by the appellant was within time. Keeping in view the peculiar facts of the present case, the appellant is entitled to the benefit of the exclusion of time in pursuing the appeal before Meerut Division and, therefore, the appeal finally filed before the Dehradun Division is not barred by limitation. Conclusion - The appellant's appeal is not barred by limitation due to the exclusion of time spent in prosecuting the appeal at the incorrect jurisdiction. The matter is remanded to the Commissioner (Appeals) for adjudication on the merits, allowing the appellant to have their appeal heard substantively. Appeal allowed by way of remand. ISSUES PRESENTED and CONSIDEREDThe core issue in this appeal was whether the delay in filing the appeal before the Commissioner (Appeals) beyond the statutory period of two months plus one additional month could be condoned. Specifically, the question was whether the time taken by the appellant to file the appeal initially at the wrong jurisdiction due to misleading information should be excluded from the limitation period under the principles of Section 14 of the Limitation Act, 1963.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework involved Section 85(3A) of the Finance Act, 1994, which prescribes a limitation period for filing appeals. The appellant sought relief under the principles of Section 14 of the Limitation Act, 1963, which allows the exclusion of time spent in bona fide litigation pursued with due diligence but ultimately aborted due to jurisdictional errors. The appellant relied on the precedent set by the Apex Court in M.P. Steel Corporation vs. Commissioner of Central Excise, which emphasized the liberal interpretation of Section 14 to advance the cause of justice.Court's Interpretation and ReasoningThe Tribunal interpreted Section 14 of the Limitation Act liberally, in line with the precedent that supports excluding time spent in bona fide litigation pursued with due diligence. The Tribunal acknowledged that the appellant filed the appeal at the Meerut Division based on explicit instructions in the covering letter accompanying the order-in-original, which was later found to be incorrect due to jurisdictional changes. The Tribunal reasoned that the appellant's actions were justified and diligent, given the misleading information provided by the department.Key Evidence and FindingsThe evidence included the order-in-original received on 12.04.2017, the covering letter directing the appellant to file the appeal at Meerut, and the subsequent clarification sought by the appellant regarding the pre-deposit amount. The Tribunal noted that the appellant acted promptly upon receiving the order and sought necessary clarifications from the department. The appellant's appeal was filed at Meerut on 07.07.2017 and later at Dehradun on 13.07.2017 after being informed of the jurisdictional change.Application of Law to FactsThe Tribunal applied the principles of Section 14 of the Limitation Act to the facts, finding that the appellant's initial filing at Meerut was bona fide and pursued with due diligence. The Tribunal excluded the time spent in prosecuting the appeal at Meerut from the limitation period, thereby making the appeal filed at Dehradun within the permissible time frame.Treatment of Competing ArgumentsThe Revenue argued that the appellant's plea was an afterthought and that the appeal could have been filed at Dehradun sooner. The Tribunal rejected this argument, emphasizing that the appellant was misled by the department's instructions and acted in good faith. The Tribunal found the appellant's delay reasonable, given the circumstances and the misleading information provided.ConclusionsThe Tribunal concluded that the appellant was entitled to the exclusion of time spent in pursuing the appeal at Meerut under Section 14 of the Limitation Act. Consequently, the appeal filed at Dehradun was deemed timely.SIGNIFICANT HOLDINGSThe Tribunal held that the principles of Section 14 of the Limitation Act apply to exclude time spent in bona fide litigation pursued with due diligence, even in quasi-judicial proceedings. The Tribunal emphasized that such provisions should be interpreted liberally to advance the cause of justice. The Tribunal set aside the impugned order and remanded the matter back to the Commissioner (Appeals) for a decision on the merits of the case.Core Principles EstablishedThe Tribunal reinforced the principle that Section 14 of the Limitation Act should be applied liberally to exclude time spent in bona fide litigation pursued with due diligence. This principle applies to quasi-judicial proceedings and supports the advancement of justice by preventing penalization of parties misled by jurisdictional errors.Final Determinations on Each IssueThe Tribunal determined that the appellant's appeal was not barred by limitation due to the exclusion of time spent in prosecuting the appeal at the incorrect jurisdiction. The matter was remanded to the Commissioner (Appeals) for adjudication on the merits, allowing the appellant to have their appeal heard substantively.