2026 (2) TMI 781 - AT - Service Tax

Limitation under Section 85(3A): service complete on receipt of full order, appeal filed within condonable month allowed.

Limitation under Section 85(3A) was assessed by focusing on when service of an adjudication order is complete and how calendar months are computed; the ... Service of adjudication order - completeness requirement - commencement of limitation from date of complete service - computation of limitation expressed in months as calendar months - condonation of delay u/s 85(3A) of the Finance Act, 1994 - Demand of service tax along with interest and penalties against the Appellant by invoking extended period of limitation - Whether the appeal filed by the Appellant before the Commissioner (Appeals) was barred by limitation or not. - HELD THAT:- When the right to challenge crystallizes on a date when the complete copy is made available to the assessee, the date 27.10.2023, when incomplete copy of adjudication order was provided to the Appellant cannot be treated as the date of service of order. I further find that the Appellant has contended before Commissioner (Appeals) that the complete copy of adjudication order was made available to him only on 07.12.2023, which contention has not been rejected in the impugned order and therefore, 07.12.2023 is treated as the date of service of order in the present case. Once the order was served on the Appellant on 07.12.2023, the limitation period for filing appeal commences from 08.12.2023 as provided under Section 12 of the Limitation Act, 1963. Appeal to Commissioner (Appeals) has been provided under Section 85 of the Finance Act, 1994. Thus, since Section 85(3A) uses the expression ‘month’ in contrast to ‘days’, the two months period from 08.12.2023 elapsed on the corresponding date of corresponding month i.e. on 08.02.2024 and similarly the period of month under proviso to Section 85(3A) elapsed on 08.03.2024 i.e. the date on which the appeal was presented by the Appellant. Thus, the conclusion is that the appeal presented by the Appellant on 08.03.2024 was not barred by limitation but was presented within the condonable period and the Commissioner (Appeals) erred in law in rejecting the same. Having reached this conclusion, normally this Tribunal would have remanded back the matter to the Commissioner (Appeals) to consider the delay condonation application on merits. However, since the matter pertains to the period 2016-17 and the reasons given by the Appellant explaining the delay are not disputed in the impugned order and the same are otherwise found acceptable, hence in the interest of justice the delay in filing of appeal is condoned and the Commissioner (Appeals) is directed to decide the appeal on merits, preferably within a period of three months from today. Thus, the present appeal is allowed by way of remand to learned Commissioner (Appeals) for decision on merits. Issues: Whether the appeal filed by the Appellant before the Commissioner (Appeals) was barred by limitation.Analysis: The Tribunal examined (i) when service of the adjudication order on the Appellant was completed, having regard to the fact that an incomplete copy (missing pages) was initially received on 27.10.2023 and a complete copy was obtained on 07.12.2023; (ii) the period of limitation prescribed under Section 85(3A) of the Finance Act, 1994 which provides a two months period and a further condonable period of one month expressed in terms of calendar months; and (iii) applicable principles for computing calendar months as explained by higher courts and statutes. The Tribunal held that service is complete only when a full copy containing reasons is served, and therefore 27.10.2023 (when an incomplete copy was received) could not be treated as the date of service. Accepting the un-rejected contention that a complete copy was served on 07.12.2023, the limitation period under Section 85(3A) commenced from 08.12.2023. Applying the calendar-month rule, two months expired on 08.02.2024 and the further one-month condonable period expired on 08.03.2024. The appeal presented on 08.03.2024 therefore fell within the condonable period. The Tribunal, noting that the Commissioner (Appeals) had not rejected the Appellant's factual contentions regarding service and missing pages, concluded that the Commissioner (Appeals) erred in rejecting the appeal as time-barred. Considering the undisputed nature of the delay explanations and in the interest of justice, the Tribunal condoned the delay and remitted the matter to the Commissioner (Appeals) for decision on merits.Conclusion: The appeal was not barred by limitation; the delay is condoned and the appeal is remanded to the Commissioner (Appeals) for decision on merits (in favour of Appellant).