Condonation of delay in filing of appeal before Commissioner(Appeals)

[ROHIT GOEL]

Dear Sir,

Please examine the facts of case:

Ex parte service tax adjudication order for the period of 1-4-2010 to 31-3-2012 in case of assessee was passed on 02.07.2018 and received on 23.07.2018. On 27.07.2018 assessee filed rectification application and on advise of counsel waited for rectification before filing appeal. Thereafter on 22.02.2019 recovery notice received and again on 27.02.2019 assessee filed another rectification. Since no reply was received till April, assessee filed appeal on 29.04.2019. This has resulted delay of 218 days. On hearing, Commissioner dismissed the appeal being barred by limitation u/s 85(3A) of FA 1994 and did not pass any judgment on merit.

The judgment of various benches of ITAT including Chandigarh as well as P&H HC (2017 (11) TMI 1712 - PUNJAB AND HARYANA HIGH COURT-DIRECTOR, POST GRADUATE INSTITUTE OF MEDICAL EDUCATION AND RESEARCH, CHANDIGARH VERSUS THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX (APPEALS) , CHANDIGARH AND OTHERS) state that Commissioner has no power u/s 85(3A) to condone delay beyond 1 month.

Total demand raised ₹ 28 lakh out of which ₹ 22 lakh being paid but credit not allowed on the persumption that returns not filed whereas infact such returns were filed by the assessee. Further, Adjudication officer invoked extended period of limitation on the basis that returns were not filed and assessee was claiming abatement available to commercial and industrial construction service providers whereas assessee is providing works contract services.

Opinion requested:

1. Is there any way to contest before CESTAT to delay condone of 218 days in filing appeal before Commissioner Appeals caused due to advise of counsel ?

2. Rectification for allowing prepaid taxes and wrongly invoking extended period of limitation was filed but not decided by Department? What is the remedy and in case the same is rejected, can ground of allowance of prepaid taxes and incorrect invocation/time barring be contested in appeal against the order of rectification?

[KASTURI SETHI]

There is no provision for rectification of Order-in-Original/Adjudication Order (whatever the mistake might have been committed by the Adjudicating Authority). Only remedy is filing of an appeal before the Commissioner (Appeals) in your client's case. Ex parte order means the Noticee neither attended personal hearing nor filed reply to the SCN despite opportunities given by the Adjudicating Authority. Your client is on a weak wicket on this point.

However, if the ST-3 returns were actually filed (you have proof to this effect) and the department has invoked the extended period wrongly, you must challenge the OIA before CESTAT. CESTAT will hear your case on this very ground. There are so many instances where CESTAT has condoned the inordinate delay. If your client has filed ST-3 returns, your case will be very strong notwithstanding rejection by the Commissioner (Appeals) on time bar limit.

In my view, this case is fit for filing appeal with the Tribunal. Pl. note that you are to place reliance on judgments of Service Tax of various courts/Tribunals challenging wrongly invokation of extended period. Do not rely on case laws pertaining to Income Tax/ ITAT.

[ROHIT GOEL]

Dear Kasturi Ji,

Thank you for your reply.

Just to clarify the facts further: We had filed appeal but it was rejected on grounds of being time barred.

a) Section 74 of FA 1994 states that with a view to rectifying any mistake apparent from the record, the 1[Central Excise Officer] who passed any order under the provisions of this Chapter may, within two years of the date on which such order was passed, amend the order.

So wouldn't the officer have power to rectify the error contained in his order as per this section?

b) You have mentioned that there are multiple decisions of CESTAT benches condoning delay in filing appeal before Commissioner(Appeals). However I have come across decision of jurisdictional HC in case of DIRECTOR, POST GRADUATE INSTITUTE OF MEDICAL EDUCATION AND RESEARCH, CHANDIGARH VERSUS THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX (APPEALS) , CHANDIGARH AND OTHERS = 2017 (11) TMI 1712 - PUNJAB AND HARYANA HIGH COURT as well as Supreme Court decision in case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR = 2007 (12) TMI 11 - SUPREME COURT where courts have clearly stated that delay in filing appeal before Commissioner cannot be condoned by any court/authority beyond the specified period of 30 days as contained in section 85.

I would be very grateful if you can provide precedents where delay has been condoned.

c) Further since Commissioner has not admitted the appeal, whether CESTAT Bench can hear the matter on its merits without dealing with the matter of admissibility of appeal?

[YAGAY andSUN]

In our view you may get relief at Tribunal Level in this matter.

[KASTURI SETHI]

I shall revert on your every point. Commissioner (Appeal) has not admitted appeal. What are his observations in writing ? By way of letter or order ?

[ROHIT GOEL]

Dear Kasturi Ji,

The Commissioner has stated in her written order that as per provisions of sub section 3A of section 85 of FA 1994 she only has powers to condone delay of 1 month and dur to appeal in question being beyond such time, the appeal is not admitted and dismissed.

[KASTURI SETHI]

Dear Rohit Goel Ji, You must file an appeal with the Tribunal against this OIA. It is not a difficult task to trace out case laws in favour of the party. You can assail "wrongly invoked extended period" strongly. Rest depends upon luck.

[KASTURI SETHI]

As per Section 74 (1) of the Finance Act, the following are the conditions :-

(i) A mistake must be rectifiable

(ii) Mistake must be apparent

(iii) A rectifiable mistake must not be such that its rectification leads to re-writing the Order-in-Original on merits. Rectification should not result in review of the Order-in-Original.

This was such a mistake that had it been rectified it would have resulted in review of the Order-in-Original. So the department did not respond.The Adjudicating Authority should have responded to the party's application dated 27.7.18 filed for rectification of mistake either by way of acceptance or rejection.Had the Adjudicating Authority replied to the application filed for rectification, that very date of reply/letter would have become FINAL for computation of period of limitation for filing an appeal with the Commissioner (Appeals). See CESTAT Order reported as 2017 (52) S.T.R. 72 (Tri. - Mumbai) in the case of Omkar Engineers Vs. CCE, Pune = 2017 (2) TMI 263 - CESTAT MUMBAI.

You can take up this plea while filing an appeal with CESTAT.

AI Summary

Condonation of delay in appeals: contesting dismissal for exceeding limited condonation power and wrongful extended period invocation. The Commissioner (Appeals) dismissed an appeal as time barred after the assessee filed rectification applications and, following counsel's advice, delayed filing the appeal, resulting in a 218 day delay; the matter raises whether failure to decide rectification, counsel's advice, and proof of filed returns can justify condonation of delay before the tribunal and whether the department wrongly invoked extended limitation when returns were in fact filed.