CESTAT: Department’s Failure to Transfer Appeal Internally Cannot Render It Time-Barred
Pranav B Prem
The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the failure of the department to transfer the appeal internally to the appropriate appellate division cannot render the appeal time-barred under the limitation provisions. A bench comprising Ms. Binu Tamta (Judicial Member) and Mr. P.V. Subba Rao (Technical Member) ruled that the benefit of Section 14 of the Limitation Act, 1963, is available to the appellant when an appeal is prosecuted in good faith before an incorrect appellate forum. This interpretation aligns with the principle of advancing the cause of justice by excluding the time spent in bona fide litigation before a wrong forum.
Background of the Case
The appeal arose from an order passed by the Commissioner (Appeals), Dehradun, which dismissed the appeal as time-barred under Section 85(3A) of the Finance Act, 1994. This provision prescribes a limitation period of two months for filing an appeal, with an additional one-month grace period for condonation of delay. M/s Harshit Sanwal & Others, the appellant, initially filed their appeal before the Meerut division, believing it to be the correct jurisdiction based on the communication received with the order. The appeal was filed on July 7, 2017. However, on July 11, 2017, the appellant was informed that the appropriate appellate authority was in Dehradun due to an administrative change. Consequently, the appellant refiled the appeal in Dehradun on July 13, 2017. The department opposed the appeal, arguing that the appellant could have filed the appeal promptly upon learning of the correct forum, as the distance between Meerut and Dehradun is only about four hours.
Tribunal's Analysis and Findings
The CESTAT carefully analyzed the timeline and found that the appellant had acted diligently and in good faith. It was not disputed that the appellant received the order on April 12, 2017, and promptly sought clarification on the pre-deposit requirement through letters dated April 14, 2017, and May 15, 2017. After receiving the clarification, the appellant filed the appeal on July 7, 2017, before the Meerut division.
"As per the appellant, after receiving the clarification from the department, they had made the pre-deposit and thereafter the appeal was filed on 07.07.2017... when he visited, he was informed that the office for Haldwani Division has been shifted to Dehradun," the Tribunal noted.
When the appellant learned that the Meerut division no longer had jurisdiction, they requested the department to internally transfer the appeal to Dehradun. This request was denied, and the appellant refiled the appeal within two days, on July 13, 2017.
The Tribunal rejected the department's argument that the appellant should have filed the appeal on the same day they were informed, stating, "If the order-in-original had specifically provided that the appeal lies before the Meerut Division, the appellant was required to prosecute the appeal there, and if the said office has been shifted to another division, which was beyond the jurisdictional limits of that city/district, it is necessary that it would require some time for the appellant to approach that division."
Application of Section 14 of the Limitation Act
The CESTAT relied on the Supreme Court judgment in M.P. Steel Corporation v. Commissioner of Central Excise (Civil Appeal No. 4367 of 2004), which held that Section 14 of the Limitation Act should be construed liberally to exclude the time spent in prosecuting proceedings bona fide before a forum without jurisdiction. Quoting the Supreme Court's observation, the Tribunal stated: "The principle of section 14, which is the principle based on advancing the cause of justice, would certainly apply to exclude time taken in prosecution proceedings, which are bona fide and with due diligence pursued, which ultimately end without a decision on the merits of the case."
The Tribunal also noted that the department's delay in responding to the appellant's pre-deposit query could not be held against the appellant. "The delay in responding to the letter by the Department by almost one month cannot be attributed to the appellant," the Tribunal emphasized.
Decision of the Tribunal
Applying the principles laid down in M.P. Steel Corporation and other precedents, the CESTAT held that the time spent prosecuting the appeal before the Meerut division should be excluded. With this exclusion, the appeal filed in Dehradun was within the limitation period.
"Keeping in view the peculiar facts of the present case, the appellant is entitled to the benefit of the exclusion of time in pursuing the appeal before Meerut Division, and therefore, the appeal finally filed before the Dehradun Division is not barred by limitation," the bench concluded. The Tribunal set aside the order passed by the Commissioner (Appeals) and remanded the matter for a decision on merits. The appeal was allowed by way of remand.
Appearance
Shri Atul Kumar and Shri Aditya Vikram Singh, Advocates for the Appellant.
Shri Aejaz Ahmad, Authorised Representative for the Respondent.
Cause Title: Harshit Sanwal & Ors V. Commissioner of CGST
Case No: Service Tax Appeal 50721 of 2019
Coram: Hon’ble Ms. Binu Tamta [Member (Judicial)], Hon’ble Mr. P.V. Subba Rao [Member (Technical)]
[Read/Download order]
