The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has held that the Commissioner (Appeals) cannot condone a delay beyond the maximum period expressly permitted under Section 85(3A) of the Finance Act, 1994.
The bench of Sanjiv Srivastava (Judicial Member) dismissed an appeal filed by Raj Kumar Rastogi HUF and upheld the rejection of its first appeal as time-barred. It declined to examine the taxpayer’s substantive contention that the service tax demand had been raised using a Permanent Account Number (PAN) that did not belong either to the HUF or to its karta.
The dispute arose from an order passed by the adjudicating authority concerning a service tax demand. The taxpayer challenged that order before the Commissioner (Appeals), Customs, Central Excise and CGST, Lucknow.
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The Commissioner (Appeals), however, rejected the appeal through an order dated August 23, 2023, holding that it had been filed beyond the legally permissible period. The appellate authority observed that it was a creature of statute and could not exercise jurisdiction beyond the limits prescribed by law.
Accordingly, the first appeal was dismissed as time-barred without examining the merits of the service tax demand.
The HUF subsequently approached the CESTAT and requested that the delay be condoned.
Before the Tribunal, the taxpayer argued that the demand purportedly related to the HUF of Raj Kumar Rastogi, whose PAN was stated to be ADTPR3892B. It was contended that the demand had instead been raised against PAN AYIPS2047P, which allegedly belonged neither to Raj Kumar Rastogi in his individual capacity nor to his HUF.
The appellant also submitted that Raj Kumar Rastogi was a senior citizen aged approximately 78 years. According to the appellant, medical exigencies prevented the appeal from being filed before the Commissioner (Appeals) within the prescribed period.
On these grounds, the taxpayer asked the Tribunal to condone the delay and permit adjudication of the dispute on its merits.
The Revenue, on the other hand, supported the findings recorded by the lower authorities.
CESTAT noted that Section 85(3A) of the Finance Act, 1994, requires an appeal against a service tax adjudication order to be presented before the Commissioner (Appeals) within two months from the date on which the order is received.
The proviso to the provision allows the Commissioner (Appeals) to accept an appeal filed within a further period of one month if the appellant establishes that sufficient cause prevented the appeal from being filed during the original two-month period.
The Tribunal explained that the provision establishes an absolute outer limit of three months—two months as the normal limitation period and one additional month during which the delay may be condoned.
In the present case, the appeal had been filed after the expiration of that outer limit. CESTAT therefore concluded that the Commissioner (Appeals) had correctly dismissed it as time-barred.
The Tribunal relied on the Supreme Court’s decision in Singh Enterprises v. Commissioner of Central Excise, in which the apex court interpreted a materially similar limitation provision under Section 35 of the Central Excise Act, 1944.
In that case, the Supreme Court held that where legislation grants an appellate authority the power to condone a delay only for a specified additional period, the authority cannot entertain an appeal filed after that period expires.
The statutory language, the Supreme Court had ruled, makes the legislative intention clear: the appellate authority’s power to condone a delay is confined to the period expressly stated in the proviso. The general power under Section 5 of the Limitation Act, 1963, cannot be invoked to extend a special statutory limitation period when the governing law excludes such an extension.
Applying this principle, CESTAT held that neither the Commissioner (Appeals) nor the Tribunal could override the limitation prescribed under Section 85(3A).
CESTAT also referred to the Supreme Court’s April 8, 2024 decision in Pathapati Subba Reddy (Died) by Legal Representatives and Others.
In that judgment, the Supreme Court explained that limitation law is based on the public policy principle that litigation must come to an end after a fixed period. Although courts may adopt a liberal or justice-oriented approach while considering sufficient cause, that approach cannot be used to defeat substantive statutory provisions governing limitation.
The Supreme Court had further held that the merits of the underlying dispute ordinarily need not be considered while deciding an application for condonation of delay. The condonation request must be assessed independently against the legally recognised parameters governing delay.
CESTAT cited these principles to reinforce that a potentially arguable case on merits does not, by itself, authorise an appellate authority to disregard a mandatory limitation provision.
The Tribunal additionally relied on the Supreme Court’s decision in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Limited. The Supreme Court refused to grant indulgence where an appeal against an assessment order had been filed after the maximum statutory period had expired. The Court held that explanations concerning the underlying tax dispute or subsequent compliance could not justify non-filing of the appeal within the prescribed period.
Referring to this precedent, CESTAT reiterated that once the statutory outer limit for filing an appeal has expired, the appellate authority cannot extend that limit merely because the taxpayer offers an explanation for the delay or raises an arguable challenge to the demand.
Although the taxpayer alleged that the service tax demand had been raised against an unrelated PAN, CESTAT did not adjudicate that contention. The Tribunal confined its decision to the maintainability of the first appeal and the Commissioner (Appeals)’ power to condone the delay.
The order therefore does not affirm or reject the taxpayer’s allegation concerning the identity of the assessee or the PAN against which the demand was raised.
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