Solux Galfab Pvt. Ltd. vs Commissioner of Service Tax

Harish Tandon, J.—The proceeding was initiated against the petitioner for evasion of service tax and non-payment of service tax amounting to rupees 63 lacs and odds. According to the petitioner, the substantial amount had already been deposited and contest is made over the further liability of the payment of Service Tax.

By an order dated 8th September, 2010 the authority determined the quantum of the Service Tax and held that because of the evasion of service tax, the petitioner is liable to equal amount of penalty. The said order is challenged before the appellate authority, being the Customs, Excise and Service Tax Appellate Tribunal, beyond the prescribed period of limitation. The said appeal was preceded by an application for condonation of delay in preferring the said appeal within the period of limitation. It appears that the petitioner themselves admitted to have filed the appeal with a delay of 21 days. It is also not in dispute that the Tribunal proceeded to decide the application for condonation of delay ex parte and ultimately dismissed the same as a consequence whereof the application for stay as well as an appeal stood dismissed.

In a miscellaneous application filed before the Tribunal, the petitioner seeks for restoration of the appeal as well as the application for condonation of delay which is again dismissed and the said order is challenged in this writ petition.

It is not in dispute that the Court or the Tribunal should adopt a lenient approach in dealing with an application for condonation of delay. Length of delay is not material but sufficiency of the cause is. Delay of longer period may be condoned if sufficient cause is made out but the delay of shorter period may not be condoned in absence thereof. The approach of the Tribunal should not be such to find a fault in the application seeking delay but should encourage the litigation to be decided on merit. Furthermore, when an order is passed ex parte and the defaulting litigant approaches the Tribunal showing cause of nonappearance, the Tribunal should not act harshly by simply recording that petition does not show that the petitioner was prevented by sufficient cause. Furthermore, the Tribunal has misconstrued the application to be an application for review when proviso to Rule 20 of the Customs, Excise and Services Tax Appellate Tribunal (Procedure) Rules, 1982 provides for setting aside ex parte order of dismissal provided a sufficient cause is made out. There lies distinction between review and the application setting aside the ex parte order. The review is to be decided within the settle legal parameter as laid down in the rules applicable. Review is a creature of a statute and cannot be usurped by a statutory authority or the Tribunal in absence thereof.

The attention of this Court is also drawn to Rule 41 of the said Procedure Rules which gives an inherent powers on the Tribunal to pass such orders or give such directions to prevent abuse of the process or to secure ends of justice. The Tribunal appears to have proceeded on wrong premise that the petitioner is seeking for review of an earlier order, when, in fact, the petitioner prays for setting aside the ex parte order under proviso to Rule 20 of the Customs, Excise and Services Tax Appellate Tribunal (Procedure) Rules, 1982.

The Court, therefore, finds that the Tribunal invoked the wrong provision and therefore, the order impugned is unsustainable in law. This Court on perusing the averments made in the miscellaneous application finds that the petitioner has made out a case, which constitutes the sufficient cause. This Court finds that the petitioner was prevented by sufficient cause in not appearing on the day when his application for condonation of delay was decided ex parte.

Accordingly, this Court sets aside the impugned order as a consequence whereof the Miscellaneous Application No. 83359 of 2013 stands allowed.

The application for condonation of delay is restored to its original file and number and the Tribunal is requested to fix up a date for hearing of the said application and after giving an opportunity of hearing to the petitioner shall decide the same in accordance with law.

This Court hopes and trusts that the Tribunal would make all endeavor to dispose of the application for condonation of delay as expeditiously as possible, not later than four weeks from the date of communication of this order. The writ petition is, thus, disposed of. No order as to costs.