The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that an appeal cannot be rejected on limitation grounds where the Department failed to properly serve the adjudication order on the assessee in accordance with the statutory requirements. 

The bench of Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) condoned a minor delay of two days in filing the appeal and remanded the matter to the Commissioner (Appeals) for a decision on merits. 

The case arose from service tax proceedings initiated against a proprietor engaged in providing Tata Taurus tippers and earth-moving equipment on hire. The Department alleged that the activity constituted taxable “Supply of Tangible Goods Service” and that service tax had not been paid during the financial years 2012-13 to 2015-16. According to the Department, the assessee had earned hire charges amounting to approximately ₹4.97 crore and was liable to pay service tax exceeding ₹63.98 lakh. 

The Department further alleged suppression of facts and invoked the extended period of limitation. A show cause notice was issued in April 2018 proposing recovery of service tax along with interest and penalties. The adjudicating authority confirmed the demand through an Order-in-Original dated March 27, 2019. 

Subsequently, the Commissioner (Appeals) dismissed the assessee’s appeal as time-barred, holding that the adjudication order had been served on the assessee’s advocate on May 31, 2019 and therefore the appeal filed on March 12, 2020 was beyond the prescribed limitation period. 

Before the Tribunal, the assessee contended that the order had never been properly served. It was argued that the advocate on whom the Department relied, Shri Kuldeep Jalan, was never authorized to receive the Order-in-Original on behalf of the assessee.

The assessee maintained that the authorized representative during adjudication proceedings was another advocate, Shri Amit Dave, who had appeared in response to the show cause notice. According to the assessee, the Order-in-Original was ultimately received by his Chartered Accountant only on January 10, 2020, and the appeal filed on March 12, 2020 was therefore within the permissible period. 

The Department relied upon an acknowledgment showing receipt of the adjudication order by Advocate Kuldeep Jalan on May 31, 2019. It argued that the advocate had earlier represented the assessee during investigation and had submitted documents on his behalf. On that basis, the Department contended that service upon the advocate was valid and that the Commissioner (Appeals) had correctly dismissed the appeal as barred by limitation. 

After examining the records, the Tribunal found significant deficiencies in the manner in which the Department attempted service of the adjudication order.

The Bench noted that the order was initially dispatched by post on April 12, 2019 but was returned undelivered on April 24, 2019 with remarks indicating that the assessee was not available at the address. The Tribunal held that mere dispatch of the order could not amount to valid service when the postal article was admittedly returned undelivered. 

The Tribunal observed that the Department had failed to comply with the alternative modes of service prescribed under Section 37C of the Central Excise Act, 1944, made applicable to service tax matters through Section 83 of the Finance Act, 1994. The statutory provisions required the Department to affix the order at the assessee’s place of business or residence and also at a conspicuous part of the departmental office when normal service could not be effected. No such steps were taken. 

The Tribunal further found that there was no material on record demonstrating that Advocate Kuldeep Jalan had ever been authorized to receive the adjudication order on behalf of the assessee.

On the contrary, the records showed that Advocate Amit Dave had appeared for the assessee before the adjudicating authority. The Bench observed that the Department failed to explain why the order was not sent to the advocate who had actually appeared during adjudication proceedings. 

The Tribunal therefore declined to treat service upon Advocate Kuldeep Jalan as valid service on the assessee. 

Accepting the assessee’s contention that the order was received on January 10, 2020, the Tribunal recalculated the limitation period under Section 85(3A) of the Finance Act, 1994.

The Bench observed that the appeal filed on March 12, 2020 was delayed by only two days. It further noted that the Commissioner (Appeals) possesses statutory power to condone delays of up to thirty days beyond the prescribed limitation period. However, since the appeal had been dismissed outright as time-barred, the merits of the case were never examined. 

Invoking the principles of natural justice, the Tribunal held that the assessee deserved an opportunity to contest the service tax demand on merits. The Bench condoned the two-day delay and remanded the matter to the Commissioner (Appeals) for fresh adjudication after granting a reasonable opportunity of hearing to the assessee. 

The Commissioner (Appeals) has been directed to pass a fresh order on merits within four months from receipt of the Tribunal’s order. Consequently, the impugned order dismissing the appeal on limitation grounds was set aside. 

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