2025 (5) TMI 1135 - HC - Service Tax

Appeal dismissed for filing two years late under Section 85(3A) Finance Act 1994 90-day limit

HC dismissed appeal challenging Commissioner (Appeals) order that rejected appeal as time-barred. Under Section 85(3A) Finance Act 1994, appeals must be ... Time limitation of filing appeal - appeal filed beyond the prescribed period of limitation - power of Commissioner (Appeals) and the Tribunal to condone delay in filing the appeal beyond the statutory limitation period prescribed under the Finance Act, 1994 - HELD THAT:- A bare perusal of Section 85(3A) of the Finance Act, 1994 leaves no room of doubt that though an appeal should be presented within two months from the date of receipt of decision or order of the adjudicating authority, in case it is filed beyond the said period of time, the Commissioner of Central Excise (Appeals), in a given case, where he is satisfied regarding existence of sufficient cause preventing the appellant from presenting the appeal within time, may allow its presentation within a further extended period of one month. It means that though power to condone delay is very much there under the proviso itself, the same cannot go beyond the extended period of one month; that is to say that total 60+30=90 days period is available for filing appeal. Therefore, this Court does not find any error in the order of the Commissioner (Appeals) in dismissing the appeal as barred by limitation, inasmuch as, the same was filed after a period of more than two years. The Hon’ble Supreme Court, in the case of M/s Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], has clearly laid down that statutory scheme under the Act excludes applicability of Section 5 of the Limitation Act. Though sub-section (5) of Section 35-B of the Act, 1944 does not specify a particular period for which delay in filing appeal can be condoned, apparently, Section 35-B is applicable in respect of appeals filed before the Appellate Tribunal and not before the Commissioner. In the instant case, since the appeal filed before the Tribunal was well within time, the provision has no application. For this reason, the other argument from the appellant's counsel that Tribunals in other States are condoning delay in filing appeals, is thoroughly misconceived and irrelevant for the instant case. Conclusion - The dismissal of the appeal before the Commissioner (Appeals) upheld, as barred by limitation and the Tribunal's order upholding the same affirmed. The appeal before the Tribunal was held to be within time, thus no question of condonation arose. There are no error in orders passed by the Commissioner (Appeals) as well as the Tribunal. Consequently, the present appeal has no merit and is dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court were:(a) Whether the appeal filed before the Commissioner (Appeals) was maintainable despite being filed beyond the prescribed period of limitation;(b) Whether the Commissioner (Appeals) and the Tribunal possessed the authority to condone delay in filing the appeal beyond the statutory limitation period prescribed under the Finance Act, 1994;(c) Whether Section 5 of the Limitation Act, 1963 applies to condonation of delay in appeals under the Finance Act, 1994, or whether the limitation provisions under the Finance Act exclude the applicability of the Limitation Act;(d) Whether the Tribunal erred in upholding the dismissal of the appeal by the Commissioner (Appeals) on the ground of limitation and whether the Tribunal ought to have condoned the delay and decided the appeal on merits;(e) The applicability and interpretation of Section 85(3A) of the Finance Act, 1994 and Section 35-B of the Central Excise Act, 1944, with respect to limitation and condonation of delay;(f) The legitimacy of the appellant's contention that inconsistent standards are applied by Tribunals in different States regarding condonation of delay.2. ISSUE-WISE DETAILED ANALYSISIssue (a) and (b): Maintainability of Appeal and Authority to Condon DelayThe Court examined the timeline of events and found that the adjudicating authority's order was passed on 07.07.2020 and received by the appellant on 13.07.2020. The appeal before the Commissioner (Appeals) was filed on 15.02.2023, which was over two years after receipt of the order, exceeding the statutory limitation period.The relevant statutory provision governing limitation was Section 85(3A) of the Finance Act, 1994, which mandates that an appeal must be filed within two months of receipt of the order, with a proviso permitting condonation of delay for an additional one month if sufficient cause is shown.The Court noted that the Commissioner (Appeals) dismissed the appeal as barred by limitation relying on this provision and the Supreme Court precedent in M/s Singh Enterprises, which held that the appellate authority's power to condone delay is limited to a maximum extension of one month beyond the initial two-month period. The Court emphasized that this statutory scheme excludes the applicability of Section 5 of the Limitation Act, 1963, which ordinarily allows courts discretion to condone delay if sufficient cause is shown.The Court reasoned that since the appeal was filed after more than two years, well beyond the maximum 90-day period (60 days plus 30 days extension), the Commissioner (Appeals) rightly dismissed it as barred by limitation.Issue (c): Applicability of Section 5 of the Limitation Act, 1963The appellant argued that Section 5 of the Limitation Act, 1963, which allows condonation of delay for sufficient cause, should apply to appeals under the Finance Act. The Court rejected this argument based on the binding Supreme Court judgment in M/s Singh Enterprises, which held that the specific limitation provisions under the Finance Act exclude the application of the Limitation Act's Section 5. The Court reproduced paragraph 8 of the Supreme Court judgment, which explicitly states that the appellate authority has no power to condone delay beyond the 30-day extension period.Issue (d): Tribunal's Role in Condonation of Delay and Merits ConsiderationThe appellant contended that even if the Commissioner (Appeals) dismissed the appeal as barred by limitation, the Tribunal should have condoned the delay and decided the appeal on merits. The Court rejected this contention, explaining that the Tribunal's role is appellate and it must adhere to the statutory limitation framework. The Tribunal upheld the Commissioner (Appeals)'s order, and since the appeal before the Tribunal was filed within the prescribed period, the question of condoning delay before the Commissioner (Appeals) did not arise before the Tribunal.The Court further clarified that a superior Court cannot condone delay in filing an appeal before a subordinate authority. The Tribunal and the Commissioner (Appeals) must apply the limitation provisions strictly.Issue (e): Interpretation of Section 85(3A) of the Finance Act, 1994 and Section 35-B of the Central Excise Act, 1944The Court analyzed Section 85(3A) of the Finance Act, which prescribes a two-month period for filing appeals with a proviso allowing a further one-month extension if sufficient cause is shown. The Court noted this provision clearly limits the condonation power to a maximum of 90 days from the date of receipt of the order.Regarding Section 35-B of the Central Excise Act, 1944, which allows the Appellate Tribunal to admit appeals after the expiry of the limitation period if sufficient cause is shown, the Court observed that this provision applies to appeals before the Tribunal and not before the Commissioner (Appeals). Since the appeal before the Tribunal was within time, Section 35-B's condonation power was not invoked in this case. The appellant's reliance on this provision to seek condonation of delay before the Commissioner (Appeals) was therefore misplaced.Issue (f): Alleged Inconsistent Standards by Tribunals in Different StatesThe appellant argued that different Tribunals in various States condone delay inconsistently, and thus sought parity. The Court dismissed this argument as irrelevant because the appeal before the Tribunal was filed within time and the question of condoning delay did not arise. The Court emphasized that the statutory provisions and binding precedents govern the limitation and condonation powers, and any inconsistency in other cases does not affect the present matter.3. SIGNIFICANT HOLDINGSThe Court's key legal conclusions and principles established include:'A bare perusal of the afore-quoted provision leaves no room of doubt that though an appeal should be presented within two months from the date of receipt of decision or order of the adjudicating authority, in case it is filed beyond the said period of time, the Commissioner of Central Excise (Appeals), in a given case, where he is satisfied regarding existence of sufficient cause preventing the appellant from presenting the appeal within time, may allow its presentation within a further extended period of one month.''The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days which is the normal period for preferring appeal. Therefore, there is complete exclusion of Section 5 of the Limitation Act.''It is the Court of Appeal, who has or does not have or does have limited power to condone delay in filing an appeal before it. Superior Court has no power to condone delay in filing appeal before the Court/Authority subordinate to it.''Section 35-B of the Central Excise Act, 1944, though confers power on the Appellate Tribunal to condone delay in filing appeals beyond limitation period, is applicable only to appeals before the Tribunal and not before the Commissioner (Appeals).'The Court upheld the dismissal of the appeal before the Commissioner (Appeals) as barred by limitation and affirmed the Tribunal's order upholding the same. The appeal before the Tribunal was held to be within time, thus no question of condonation arose. The appellant's plea for condonation beyond the statutory period was rejected based on binding Supreme Court precedent excluding the application of Section 5 of the Limitation Act in this context.