Calcutta HC Condones 2,262-Day Delay Citing CESTAT’s “Hyper-Technical” Approach in SVLDRS-Linked Appeal

The Calcutta High Court has condoned an extraordinary delay of 2,262 days in filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), holding that the Tribunal adopted a “hyper-technical” approach in refusing to entertain the matter on merits. The Bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar allowed the appeal filed by an assessee under Section 35G of the Central Excise Act, 1944, and restored the appeal before CESTAT subject to payment of costs. The appeal arose from an Interim Order dated May 14, 2024 passed by the CESTAT, Eastern Zonal Bench, Kolkata, by which the Tribunal declined to condone the delay in filing a statutory appeal against an Order-in-Original imposing a penalty of ₹10.23 lakh. The Tribunal dismissed the appeal summarily, characterising the assessee’s conduct as one of “total negligence.” The statutory limitation for filing the appeal expired on April 10, 2018. However, the assessee approached the Tribunal only on March 28, 2024. To explain this prolonged delay, the assessee relied primarily on its attempt to settle the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS), a one-time amnesty scheme introduced by the Centre to liquidate pending legacy tax disputes. The assessee had applied under the scheme on December 18, 2019 and claimed to have remained under a bona fide belief that the dispute would be resolved until it allegedly discovered in late 2023 that the application had been rejected. The Tribunal rejected the explanation on two main grounds. First, it held that the assessee failed to account for the period between April 2018, when limitation expired, and December 2019, when the SVLDRS application was filed. Second, it observed that the rejection of the SVLDRS application was reflected on the public portal as early as January 20, 2020, and therefore, the plea of ignorance for nearly four years was untenable. On this reasoning, the Tribunal concluded that the assessee’s inaction amounted to gross negligence, disentitling it from the discretionary relief of condonation of delay under Section 5 of the Limitation Act, 1963. Setting aside the Tribunal’s order, the High Court framed the substantial question of law as to whether the CESTAT was justified in extinguishing the assessee’s right to challenge a substantial financial penalty by adopting an unduly technical approach, particularly when the delay was attributed to the pursuit of a State-sponsored amnesty scheme. The Bench reiterated the settled principle that the expression “sufficient cause” under Section 5 of the Limitation Act must receive a liberal construction to advance the cause of justice. Relying on landmark Supreme Court judgments such as Collector, Land Acquisition v. Katiji and N. Balakrishnan v. M. Krishnamurthy, the Court emphasised that the length of delay is immaterial; what matters is the acceptability of the explanation. The Court noted that the SVLDRS, 2019 was a beneficial scheme intended to resolve legacy disputes and reduce litigation. Even if the assessee was ultimately found ineligible under the scheme, the act of applying demonstrated a clear intention to resolve the dispute and could not be labelled as a dilatory or mala fide tactic. The Bench observed that the law of limitation is not meant to act as an “extinguishing engine” for substantive rights. The Court also took judicial notice of the disruption caused by the COVID-19 pandemic. Referring to the Supreme Court’s suo motu orders excluding the period from March 15, 2020 to February 28, 2022 for the purpose of limitation, the Bench held that the Tribunal’s expectation that the assessee should have continuously monitored the online portal during this period was divorced from ground realities. The Court balanced equities by imposing costs of Rs. 10,000 on the assessee, payable to the Revenue. The delay of 2,262 days was condoned subject to payment of the said amount within four weeks. The CESTAT was directed to restore the appeal to its original number and decide it afresh on merits after granting both sides an opportunity of hearing. The High Court made it clear that justice should not be sacrificed at the altar of procedural technicalities, particularly in tax matters involving significant financial consequences. Case Details Case Title: Shree Shyam Steel Co Vs Commissioner Of Central Tax, CGST And Central Excise Case No.: CEXA 60 OF 2024 Date: 24.12.2025 Counsel For Petitioner: N.K. Chowdhury, Adv. Counsel For Respondent: Vipul Kundalia, Sr. Adv. Click Here To Read Order Read More: No Toll Plaza Receipts Needed to Prove “Actual Movement” When E-Way Bills, Bank Payments, GST Returns Exist: Allahabad HC

Calcutta HC Condones 2,262-Day Delay Citing CESTAT’s “Hyper-Technical” Approach in SVLDRS-Linked Appeal

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