The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has upheld the dismissal of an appeal challenging an interest demand of ₹23.26 lakh on delayed payment of service tax, ruling that an appeal before the Commissioner (Appeals) must be filed within the limitation period prescribed under Section 85 of the Finance Act, 1994.

The Bench of Hemambika R. Priya (Technical Member) observed that that an appeal against an adjudication order must ordinarily be presented before the Commissioner (Appeals) within two months from the date on which the order is received. The Commissioner may condone a further delay of only one month if the appellant establishes sufficient cause for not filing the appeal within the initial period.

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The dispute arose from an audit of the appellant’s records. The department found that the assessee had made delayed payments of service tax for the period from April 2014 to March 2016 but had allegedly failed to pay the corresponding interest.

Based on the audit findings, the department issued a show-cause notice dated February 19, 2020, proposing to recover interest of ₹23,26,594 on the delayed deposit of service tax.

According to the Tribunal’s order, the appellant neither replied to the show-cause notice nor appeared before the adjudicating authority when the matter was listed for a personal hearing. Consequently, the adjudicating authority, through an order dated February 18, 2021, confirmed the interest demand under Section 75 of the Finance Act, 1994.

The assessee subsequently challenged the order before the Commissioner (Appeals). After considering the circumstances, the appellate authority initially remanded the dispute to the original adjudicating authority with directions to furnish the detailed calculation of interest to the appellant. The authority was also asked to obtain details concerning payments made by the service recipient.

Following the remand, the adjudicating authority once again confirmed the demand for interest. The assessee filed another appeal, but the Commissioner (Appeals) rejected it on the ground that it had been filed after the permissible limitation period.

The matter then reached the CESTAT. Despite several opportunities being granted, nobody appeared on behalf of the appellant. The Tribunal noted that the appellant had already been warned twice that a final opportunity was being provided. It therefore proceeded to decide the appeal on the basis of the available record after hearing the departmental representative.

Examining Section 85 of the Finance Act, 1994, the Tribunal observed that, in respect of adjudication orders passed after the Finance Bill, 2012 received presidential assent, an appeal must be filed within two months from the date of receipt of the order.

The proviso to Section 85(3A) permits the Commissioner (Appeals) to admit an appeal during an additional period of one month, but only when satisfied that sufficient cause prevented the appellant from filing it within the prescribed two months.

The Tribunal noted that the Commissioner (Appeals), in the impugned order, had specifically recorded that the appellant failed to submit any reason or supporting document to justify condonation of the delay. No material was produced to establish that the appeal had been filed during the additional condonable period or that there was sufficient cause for the delay.

CESTAT further observed that the appellant did not appear or place any such supporting documents before the Tribunal either. In the absence of evidence explaining the delay, the Tribunal found no infirmity in the Commissioner (Appeals)’ decision.

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