2025 (8) TMI 570 - AT - Service Tax

Delay in Filing Appeal Must Be Condoned; Appeal to Be Decided on Merit Under Section 35(4) of Central Excise Act

The CESTAT Mumbai remanded the appeal to the Commissioner (Appeals) for reconsideration, holding that the delay of three days in filing the appeal should ... Condonation of delay of 3 days in filing appeal - power of Commissioner (Appeals) to condone delay - demand raised on the basis of data received from Income Tax Department - HELD THAT:- Appellant was not provided with an opportunity to place its grounds that had occasioned the delay in filing of appeal before the Commissioner (Appeals) and also before appeal was admitted for hearing, no defect notice on the ground of admissibility was issued from his office. The appeal has not been disposed of on merit and therefore there is a requirement that appeal is to be heard on merit and decided in accordance with Sub-Section 4 of Section 35 A of the Central Excise Act, equally applicable to Service Tax matters as per provision contained in Sub-section 5 of Section 85 of the Finance Act, 1994 that requires the Commissioner (Appeals) to pass order disposing of the appeal in writing after stating the points for determination, the decision thereon and the reasons for such decision, which in the instant case has not been followed as he had dismissed the appeal after hearing only on the ground of limitation, which should have been done before admission of the appeal. Since Ld. Counsel for the Appellant agrees to participate in the hearing of the appeal after notice and file the COD application explaining the ground of delay of 3 days in filing appeal before the Commissioner (Appeals), it would be prudent on the part of the Tribunal to remand the matter back to the Commissioner (Appeals) for re-hearing of the matter and for its disposal in accordance with Section 35(4) of the Central Excise Act, equally applicable to Service Tax matters. Appeal allowed by way of remand. 1. ISSUES PRESENTED and CONSIDERED- Whether an appeal admitted and heard by the Commissioner (Appeals) can be dismissed in the final order on the ground of limitation without earlier issuance of a defect notice or providing the appellant an opportunity to explain delay.- Whether the requirement under Sub-Section 4 of Section 35 A of the Central Excise Act (as made applicable to Service Tax matters by Sub'section 5 of Section 85 of the Finance Act, 1994) - to pass an order disposing of the appeal in writing stating points for determination, the decision thereon and the reasons for such decision - was complied with where the appeal was dismissed solely on limitation after hearing.- Whether remand to the Commissioner (Appeals) is required for re'hearing where the appellant participated in hearing, the ground of delay was not agitated during hearing, and no defect notice on admissibility was issued prior to admission.- Whether, in the circumstances of delay arising from an asserted technical glitch in meeting the pre'deposit/pre'condition to file appeal, the appellant ought to be permitted to file a condonation of delay (COD) application and be heard on that ground.2. ISSUE'WISE DETAILED ANALYSISIssue A: Admissibility and procedure - dismissal on limitation after admission and hearing without defect notice or opportunity to explain- Relevant legal framework and precedents: - Sub-Section 4 of Section 35 A of the Central Excise Act (requirement to dispose of appeal in writing stating points for determination, decision and reasons). Sub'section 5 of Section 85 of the Finance Act, 1994 makes the above provision equally applicable to Service Tax matters. (Precedential decisions referenced in the judgment recognize that once an appeal is admitted and heard without notice of non'acceptance on ground of delay, dismissal as non'maintainable in the final order is impermissible.)- Court's interpretation and reasoning: - The Tribunal holds that the Commissioner (Appeals) should have examined admissibility before admitting and hearing the appeal, or at least issued a defect notice/notice of non'acceptance on the ground of delay prior to proceeding to adjudication on the merits. Dismissing the appeal for limitation after having admitted and heard it, without providing opportunity to explain the delay, contravenes the procedural safeguards embodied in Section 35 A(4) and principles of natural justice.- Key evidence and findings: - Order'in'Original dated 24.11.2023; admitted date of receipt by appellant accepted by the Commissioner (Appeals) as 10.01.2024; appeal filed on 13.03.2024 (three days beyond the two'month limitation); no defect notice issued prior to admission; appellant appeared and participated in hearing; para'4 of the Commissioner (Appeals) order records that 'no other issue was raised' during hearing.- Application of law to facts: - Because the appeal was admitted and heard without prior objection on admissibility, and the appellant was not given an opportunity to place on record the grounds for delay (technical glitch in pre'deposit system), dismissal solely on limitation in the final order is procedurally inappropriate. The statutory requirement to set out points for determination, decision and reasons was not satisfied where dismissal followed hearing on merits'adjacent proceedings without antecedent consideration of admissibility.- Treatment of competing arguments: - The Respondent argued that, having regard to the date of the Adjudication Order (24.11.2023), the delay exceeded 90 days and therefore discretion to condone would not have been available. The Tribunal rejected reliance on the earlier date because the Commissioner (Appeals) himself accepted the date of receipt as 10.01.2024, which made the appeal three days late; further, the Commissioner (Appeals) did not afford opportunity to explain the delay nor issue defect notice prior to hearing.- Conclusion: - Dismissal of an appeal for limitation after it has been admitted and heard without issuance of a defect notice or opportunity to explain delay is improper. The appeal was not disposed of on the merits and procedural requirements were not complied with.Issue B: Applicability and requirements of Section 35 A(4) as applied to Service Tax (via Section 85(5) Finance Act) and consequences of non'compliance- Relevant legal framework and precedents: - Sub'Section 4 of Section 35 A of the Central Excise Act mandates that the Commissioner (Appeals) pass an order disposing of the appeal in writing after stating the points for determination, decision thereon and the reasons for such decision. Sub'section 5 of Section 85 of the Finance Act, 1994 extends these provisions to Service Tax matters.- Court's interpretation and reasoning: - The Tribunal interprets the statutory requirement as obligating the Commissioner (Appeals) to consider admissibility, record points for determination and furnish reasons in the final order. Where an appeal is dismissed on limitation after hearing, without prior procedural steps, the statutory mandate to dispose by way of reasoned order is not satisfied.- Key evidence and findings: - Commissioner (Appeals) accepted the appellant's asserted date of receipt and the filing date but dismissed the appeal for limitation; the order indicates participation in hearing and that 'no other issue was raised'; the statutory format of stating points for determination and reasons was not followed vis'à'vis the limitation issue which should have been addressed prior to admission.- Application of law to facts: - The statutory scheme requires that admissibility be addressed and reasons recorded. Failure to do so, especially when an appeal is effectively heard on merits without an antecedent determination of admissibility, warrants remedial action to ensure compliance.- Treatment of competing arguments: - The Respondent's contention that the delay was excessive from the earlier date of the order is countered by the Commissioner's own acceptance of the date of receipt and the procedural lapse in not issuing a defect notice or inviting explanation.- Conclusion: - Non'compliance with Section 35 A(4) (as applicable) in procedures pertaining to admission, defect notice and reasoned disposal requires that the matter be remanded for fresh consideration in accordance with statutory mandates.Issue C: Remedy - remand for re'hearing, filing of condonation of delay application and subsequent disposal- Relevant legal framework and precedents: - Principles arising from Section 35 A(4) and the applied provisions for Service Tax; identified precedents support remand where appeal was admitted and heard without prior notice of non'acceptance for delay and where appellant was denied opportunity to explain delay.- Court's interpretation and reasoning: - The Tribunal finds it prudent to remit the appeal to the Commissioner (Appeals) for re'hearing because the appeal was not disposed on merits and procedural requirements were ignored. Remand is directed to enable the Commissioner (Appeals) to permit the appellant to file a COD application explaining the three'day delay and to re'decide the appeal after hearing on merit and after complying with the statutory requirement to state points for determination, decision and reasons.- Key evidence and findings: - Admission and participation in the hearing by the appellant; absence of pre'admission defect notice; appellant's explanation that delay arose due to a glitch in the payment system for making the pre'deposit, which was a pre'condition to file appeal; Commissioner (Appeals) accepted the date of receipt and the filing date.- Application of law to facts: - Given the factual acceptance of the relevant dates and the procedural lapse, the correct remedial course is remand to allow appellant to file COD application and for the Commissioner (Appeals) to re'hear and dispose the appeal in accordance with Section 35 A(4) (and applicable provisions), ensuring points for determination and reasons are recorded.- Treatment of competing arguments: - The Respondent's view that no interference was necessary because delay exceeded 90 days from an earlier date is rejected by the Tribunal on the grounds stated above; the Tribunal emphasizes adherence to procedure and opportunity to be heard over strict reliance on the earlier date when the Commissioner (Appeals) accepted a later receipt date.- Conclusion: - The appropriate remedy is remand. The Tribunal sets aside the impugned order only for the limited purpose of remand, directs notice to appellant, requires filing of the COD application well in advance together with a copy of the Tribunal order, and mandates disposal in accordance with Sub'Section 4 of Section 35 A (as applicable).Cross'references:- Issue A and Issue B are interrelated: the procedural infirmity (Issue A) constitutes non'compliance with the statutory disposal requirements under Section 35 A(4) (Issue B), which in turn justifies the remedial remand (Issue C).