Can condonation be granted if the assessee is not aware of intricacies of law?

PJ/CASE LAW/2014-15/2438

Case:-CHHATAR AND COMPANY Vs COMMISSIONER OF CENTRAL EXCISE

Citation:-2014-TIOL-2111-HC-AHM-CX

Brief Facts:- By this appeal under section 35G of the Central Excise Act, 1944 [hereinafter to be referred to as, "the Act"], the appellant has challenged the order dated 12th March 2014 made by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as "the Tribunal") whereby, the application made by the applicant seeking condonation of the delay caused in preferring the appeal has been turned down, and the stay application as well as the appeal have also been dismissed.

Against the order-in-appeal dated 13th February, 2013 made by the Commissioner (Appeals), the appellant herein preferred an appeal before the Tribunal; however, there was a delay of 189 days in preferring the said appeal and hence, the appellant also move an application seeking condonation of the delay caused in preferring the appeal. By the impugned order, the Tribunal has rejected the application for condonation of appeal and dismissed the appeal as well as the application for stay.

Appellant contentions:- Mr. D.K Trivedi , learned advocate for the appellant invited attention to the application for condonation of the delay made by the appellant before the Tribunal to submit that sufficient cause has been made out for condoning the delay of 189 days in preferring the appeal. It was submitted that the appellant had entered into a contract with M/s Indian Rayon, Veraval for carrying out the work of electrical house wiring and industrial wiring in the plant site and colony area of M/s Indian Rayon. Thus, essentially the appellant is engaged in doing labour work and was not aware of the intricacies of law. It was submitted that after receiving the order-in-appeal the appellant had contacted his Chartered Accountant who had told him that the Commissioner (Appeals) had directed the adjudicating authority to re-quantify the demand and advised him to wait for the re-quantification. He also informed the appellant that he would be required to first deposit the entire amount of demand and penalty and only then he would be allowed to prefer an appeal. He has also not advised him as regards the forum before which such appeal was required to be preferred. When the appellant realised that he was not being given proper guidance by the concerned Chartered Accountant he contacted some other advocate and filed the appeal before the Tribunal. However, in the process the appellant could not file the appeal within the prescribed period of limitation and there was a delay of 189 days. It was submitted that the Tribunal failed to appreciate the fact that the appellant being a layman and a semi literate person relied upon the consultant for proper guidance, and was, therefore, not justified in not condoning the delay and dismissing the appeal. It was, accordingly, urged that the appeal does give rise to a substantial question of law and deserves to be allowed.

Respondent Contentions:- Opposing the appeal, Mr. H.C Buch, learned standing counsel for the respondent, submitting that the Tribunal, while rejecting the application for condonation of delay has duly considered the explanation advanced by the appellant and has not found the same to be satisfactory. Thus, it cannot be said that the discretion exercised by the Tribunal is in any manner improper or unjust so as to warrant interference. The appeal being devoid of merit, therefore, deserves to be dismissed.

Reasoning of Judgment:- Having regard to the submissions made by the respective parties as well as to the facts of the case, this court is of the view that the appeal merits consideration. Hence, admitted. The following substantial question of law arises for consideration.

"Whether on the facts and in the circumstances of the case, the Tribunal wasjustified in not condoning the delay caused in preferring the appeal?"

The facts are not in dispute. Against the order-in-appeal dated 13th February, 2013 made by the Commissioner (Appeals), the appellant herein preferred an appeal before the Tribunal; however, there was a delay of 189 days in preferring the said appeal and hence, the appellant also move an application seeking condonation of the delay caused in preferring the appeal. By the impugned order, the Tribunal has rejected the application for condonation of appeal and dismissed the appeal as well as the application for stay.

As can be seen from the averments made in the memorandum of the application for condonation of delay filed before the Tribunal, it is the case of the appellant that he was engaged in carrying out erection, commissioning and installation mainly for M/s. Aditya Birla Nuvo Limited (Rayon Division- Veraval ), M/s Gujarat Ambuja Cements Ltd. and M/s Sidhee Cements Ltd. had obtained Service Tax registration in the month of July, 2009 and had been paying service tax since August, 2009. Against the order-in-original passed by the adjudicating authority, the appellant had preferred appeal before the Commissioner (Appeals) which came to be dismissed by an order dated 13th February, 2013. The appellant, not being aware of the provisions relating to service tax, seems to have approached the Chartered Accountant and other consultants seeking advice as to what is the proper remedy against the order-in-appeal. However, the appellant was not given any proper guidance and hence, could not prefer the appeal within the prescribed period of limitation. It was only after the appellant contacted the learned advocate who is representing him before the Tribunal, that proper guidance was received by him and he could file the appeal before the Tribunal. The Tribunal, in the impugned order, has recorded that the appellant had explained the delay as due to the reason that they were not aware of the various provisions of service tax and were not aware as to whom to approach for filing the appeal; that the consultants and advocates whom they approached informed that they need to pay the entire amount and then only an appeal can be filed and that they were scared of paying the huge amount at that point of time and approached the service recipients for giving them payments so that they can pay the dues and continue to file the appeal. The Tribunal found no justifiable reason given by the appellant for condoning the delay. Another reason given by the appellant to the effect that they have deposited 75% of the amounts which is more than the amount directed by the first appellate authority also did not find favour with Tribunal, which dismissed the application for condonation of delay and consequently, also dismissed the stay application as well as the appeal.

As is apparent from the facts noted hereinabove, the appellant had preferred the appeal before the Tribunal after a delay of 189 days. The reason given for such delay as stated in the memorandum of the application for condonation of delay is that the appellant was not properly guided in the matter of preferring appeal and was also worried about the huge amount that he would be required to pay at the time of preferring the appeal. From the facts stated in the memorandum of application, it appears that the work carried out by the appellant is mainly in the nature of labour work, as such, the case put forth by the appellant that he were not aware of the intricacies of law, and therefore, could not approach the Tribunal in time appears to be quite plausible. It appears that the appellant was represented by a Chartered Accountant before the appellate authority and, therefore, relied upon him to give him proper guidance. However, since no proper guidance was given till the appellant contacted the learned advocate who represents him before the Tribunal, there was a delay in preferring the appeal. In the opinion of this court, the appellant had all the reason to hold a reasonable belief that he would be given proper guidance by the Chartered Accountant who had represented him before the appellate authority. The Tribunal, while dismissing the application for condonation of delay has merely stated that it does not find any justifiable reason for condoning the delay without assigning any reasons whatsoever as to why such explanation was not acceptable. The impugned order, therefore, is a non speaking order which does not set out the reasons for rejecting the application for condonation of delay. Moreover, from the averments made in the application, it appears that the appellant had, at no point of time, given up the cause nor does it appear as if there was any gross negligence or laches on the part of the appellant in prosecuting the appeal. Moreover, the appellant has shown his bona fides by depositing 75% of the amount. Under the circumstances, the Tribunal was not justified in summarily rejecting the application without properly applying its mind to the explanation given by the appellant. It is by now well settled that the court while considering an application for condonation of delay should adopt a pragmatic approach which furthers the cause of justice and not a narrow or pedantic approach. In the present case, the delay in preferring the appeal is not so huge so as to cause any undue prejudice to the respondent. Under the circumstances, if the delay is condoned, the only consequence would be that the appellant's appeal would be heard on merits. In the aforesaid premises, in the interest of substantial justice, the delay caused in preferring the appeal before the Tribunal is required to be condoned. The question is accordingly, answered in the negative, that is, in favour of the appellant and against the revenue. The Tribunal was not justified in not condoning the delay caused in preferring the appeal.

In the result, the appeal succeeds and is, accordingly, allowed. The impugned order passed by the Tribunal is hereby quashed and set aside. The delay caused in preferred the appeal before the Tribunal is hereby condoned. The application for condonation of delay made by the appellant in the appeal preferred before the Tribunal hereby stands allowed. Consequently the appeal as well as the stay application stand restored to the file of the Tribunal, which shall now be decided on merits in accordance with law.

Decision:- Appeal allowed.

Comment:- If assessee is not aware of the intricacies of law, then the court while considering an application for condonation of delay should adopt a pragmatic approach which furthers the cause of justice and not a narrow or pedantic approach. Accordingly, adopting a lenient approach, the condonation of delay was allowed and the appeal was restored to the file of the Tribunal for decision on merits.

Prepared by: Meet Jain

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PJ/CASE LAW/2014-15/2438

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