Whether ignorance about the procedure to file appeal valid ground for condonation of delay?

PJ/CASE LAW/2014-15/2417

Case:- SANJI LEAD AND FABRICATORS Vs. COMMISSIONER OF CENTRAL EXCISE

Citation:- 2014-TIOL-1789-HC-AHM-ST

Brief facts:- The appellant has challenged the order under Section 35G of Central Excise Act,1944 dated 10^th 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 21st August, 2012 made by the Commissioner (Appeals), the appellant herein preferred an appeal before the Tribunal;however, there was a delay of 221 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. The appellant was engaged in carrying out erection, commissioning and installation mainly for M/s. Aditya Birla Nuvo Limited (Rayon Division-Veraval). During the course of inquiry in March, 2010, the Central Excise Officers observed that the appellant was engaged in providing maintenance and repairs services and manpower supply services to M/s Aditya Birla Nuvo Ltd. (Unit: Indian Rayon), Veraval. Accordingly, a show cause notice came to the issued to the appellant on 11.10.2010 which culminated into an order-in-original dated 30.11.2011 passed by the adjudicating authority. Against the said order, the appellant went in appeal before the Commissioner (Appeals) who dismissed the same by an order dated 21st August, 2012. The appellant, not being aware of the provisions relating to service tax, was not aware as to where to approach for filing the appeal. Whomsoever, he approached, had informed him that he would have to pay the entire amounts and then only file the appeal at Ahmedabad. The appellant did not have the necessary resources for paying such huge amount and in effect and substance, being engaged in labour work was scared of paying such a huge amount at that point of time. He, therefore, approached the service recipients so that he could pay such amount and file the appeal. It is only after he was properly guided about the procedure that the appeal could be filed, however, in the meanwhile there was a delay of 366 days in filing the appeal. The Tribunal, in the impugned order, has briefly recorded the explanation advanced by the appellant and has held that in its considered view, it found that the reasoning which has been put-forth is unconvincing for the reason that before the first appellate authority, the appellant had preferred appeal in time and had prosecuted the same. The Tribunal further took note of the fact that the appellant was represented by a Chartered Accountant there and found the explanation given by the appellant to be unacceptable and dismissed the application for condonation of delay and consequently, also dismissed the stay application as well as the appeal. This in sum and substance forms the reasoning given by the Tribunal.

Appellant’s contention:- 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 366 days in preferring the appeal. It was submitted that the appellant had entered into a contract with M/s Indian Rayon, in connection with which it was required to undertake various works such as fabrication work, removal and replacement of worn and torn pipes and sheets, etc. by cutting and welding them. For the said purpose as per the contract itself the appellant was provided with all the necessary materials, tools, equipments, goods, electricity etc. by the said M/s Indian Rayon. The officers of the service tax department carried out investigation against the appellant and concluded that the appellant was engaged in providing "supply of manpower" service and "maintenance and repair" service to 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 a service tax consultant 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 also did not advise 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 service tax consultant 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 366 days in filing the appeal before the Tribunal. 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.

Respondent’s contention:- 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.

As is apparent from the facts noted hereinabove, the appellant had preferred the appeal before the Tribunal after a delay of 366 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, when the appellant had approached various persons seeking advice as to what course of action he should adopt to challenge the order-in-appeal, it appears that he was not properly guided nor did the recipients whom the appellant had rendered services all throughout render any assistance. Under the circumstances, the appellant had made out sufficient cause for condoning the delay caused in preferring the appeal. The Tribunal, while dismissing the application for condonation of delay on the ground that the appellant was represented by a Chartered Accountant before the appellate authority, failed to take into consideration the explanation put forth by the appellant in proper perspective, viz. considering his background as well as the fact that such a person may not be well versed with the provisions of service tax which is a relatively new levy and slowly and steadily different services are being brought within its purview. The impugned order, therefore, suffers from lack of proper application of mind to the facts of the case on the part of the Tribunal. 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. 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:- The basic theme of the case is that a layman or a semi-literate assessee should not be denied the opportunity to defend his case for the reason of ignorance of the appellate remedy and the procedure to file the appeal. 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. Hence, the condonation of delay application was decided leniently and the appeal was restored to the Tribunal for decision on merits.

Prepared by: Kushal Shah

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PJ/CASE LAW/2014-15/2417

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