The Karnataka High Court has upheld the rejection of a company’s application to condone a 1,141-day delay in filing a service tax appeal, holding that internal communication failures and COVID-related disruption did not establish sufficient cause for the prolonged delay.

The Bench of Chief Justice Vibhu Bakhru and Justice K.S. Hemalekha dismissed the appeal against the Customs, Excise and Service Tax Appellate Tribunal’s (CESTAT) refusal to condone the delay. 

The bench rejected the contention that the merits of the underlying tax dispute needed to be examined while deciding whether sufficient cause existed for the belated filing. 

Buy Now: 80+ Judgements Indirect Tax – September 2026 E-Magazine

The dispute arose from an Order-in-Original passed by the Principal Commissioner of Central Tax, GST-West Commissionerate, Bengaluru.

The company received the adjudication order at its local office on July 27, 2021. However, it filed its appeal before CESTAT only on July 24, 2025, with a delay of 1,141 days.

Seeking condonation, the company submitted that an employee who received the order forwarded it to another employee on August 6, 2021. According to the company, operations at its head office were restricted because of the COVID-19 outbreak, and most employees were working from home.

The employee handling the matter allegedly waited for full operations to resume so that he could collect the relevant documents and send them to a consultant for preparation of the appeal. The company further stated that he did not inform senior management about receipt of the order.

Although the company maintained a litigation tracking system, the adjudication order was not entered into that system. 

The employee concerned resigned on January 31, 2022, and other employees took over his responsibilities in March 2022. Nevertheless, no steps were taken at that stage to challenge the adjudication order.

The company claimed that the order subsequently came to light during enquiries into the status of the show cause notice. During an employee’s visit to the department on May 21, 2025, it learnt that the Order-in-Original had already been passed.

The appeal was filed approximately two months after that visit.

CESTAT rejected the application for condonation through its order dated May 6, 2026, finding that the explanation did not disclose sufficient cause for failing to appeal within the prescribed period. The company challenged that decision before the High Court under Section 35G of the Central Excise Act, 1944. 

The company argued that the merits of the tax appeal should be considered when deciding the limitation issue.

It was submitted that the company had a strong case and was likely to succeed in its challenge to at least a substantial portion of the demand because the issues were covered by the Gujarat High Court’s decision in Principal Commissioner v. Alembic Limited, reported as 2019 SCC OnLine Guj 6913.

The Bench declined to examine that contention on merits. It held that assessing the underlying tax challenge was unnecessary to determine whether the company had been prevented by sufficient cause from filing its appeal.

The court found that the company’s own explanation demonstrated a failure to take the necessary steps within the stipulated period. It characterised the matter as one in which the company had been remiss in acting expeditiously. 

The Bench also declined to accept the pandemic as justification for the delay.

It observed that the peak of the second COVID-19 wave was in April and May 2021 and that there was a return to normalcy by July 2021. It further noted that personal hearings in the adjudication proceedings continued until July 6, 2021, and that the company was duly represented.

Against that background, the court found it difficult to accept that COVID-related disruption prevented the company from filing an appeal after receiving the adjudication order on July 27, 2021.

“The outbreak of COVID-19 cannot be accepted as a justification for a delay of 1141 days,” the Bench held. 

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: Detained Goods Claimed by Owner Can Be Released Separately on Payment of Penalty: Madras High Court