2025 (5) TMI 1758 - AT - Service Tax

Application seeking condonation of delay - Covid-19 lock down period - Accountant did not join the office and left without informing about the order of Commissioner (Appeals) to have been received - interpretation of sufficient cause - HELD THAT - No doubt Hon ble Apex Court in the case of M/s Katiji 1987 (2) TMI 61 - SUPREME COURT as relied upon by the appellant has held that the Court should adopt liberal and justice oriented approach for the purposes of condonation of delay. However in another decision in the case of New India Insurance Company Ltd. Vs. Smt. Shanti Mishra 1975 (10) TMI 101 - SUPREME COURT it has been held that the discretion given by Section 5 of the Limitation Act 1963 should not be defined or crystallized so as to convert or discretionary matter into a rigid rule of law. The expression sufficient cause should receive a liberal construction however sufficient cause must cover the whole period of delay. In an earlier decision in the case of Sitaram Ramcharan Etc. Vs. M.N. Nagarshana And Ors 1959 (9) TMI 51 - SUPREME COURT . it was held that it shall be incumbent upon the party to satisfy the Court that the party had sufficient cause for not preferring the appeal or making the application itself prescribed time and this was always been understood to meet that the explanation has to cover the whole of the period of delay. Even in M/s Katiji (supra) decision it has been held that though every days every hours/every seconds delay is not to be explained by the appellant but the doctrine of a reasonably explaining the sufficient cause must be applied in rationale commonsense pragmatic manner. Reverting to the present application as already observed that leaving of the job by the Accountant during the pandemic period coupled with the fact that the order of Commissioner (Appeals) was received by the appellant within five days of the said order we hold that the delay even after exclusion of the period as discussed above is still substantial and the reason quoted is not sufficient to explain the same. This observation of ours stands corroborated from the fact the appellant was aware of the proceedings before Commissioner (Appeals) he had appeared in the matter before Commissioner (Appeals) on 3.2.2021 though through virtual mode. We find no reason for the appellant to keep waiting for more than four years for the order in such proceedings. Thus we hold that the present appeal the substantial delay has not been reasonably explained. Hence we refrain ourselves from condoning the same. The application is therefore dismissed. Resultantly the appeal with Diary No. 51720 of 2024 remains defective. Be returned to the appellant.

Summary

The core legal questions considered in this judgment revolve around the condonation of delay in filing an appeal under the relevant procedural law. Specifically, the Tribunal examined:

• Whether the delay of 824 days in filing the appeal is sufficiently explained to merit condonation under the provisions governing limitation periods.
• The applicability and scope of the Supreme Court's suo moto orders excluding limitation periods during the Covid-19 pandemic.
• The interpretation of "sufficient cause" for condonation of delay under Section 5 of the Limitation Act, 1963, including the extent to which the explanation must cover the entire period of delay.
• The relevance and applicability of judicial precedents on condonation of delay, including the principles established in the cases of Katiji, New India Insurance Co., and others.

Issue-wise detailed analysis:

1. Explanation for Delay and Its Sufficiency

The appellant contended that the delay in filing the appeal was unintentional and caused by factors beyond their control, specifically the Covid-19 lockdown and the departure of the appellant's accountant who had received the impugned order but failed to inform the appellant. The appeal was filed 824 days after the due date.

The legal framework applied includes Section 5 of the Limitation Act, 1963, which allows condonation of delay if "sufficient cause" is shown. The Tribunal also referred to the Supreme Court's suo moto orders that excluded limitation periods from 15.03.2020 to 28.02.2022 due to the pandemic.

The Tribunal noted that the order of the Commissioner (Appeals) was received by the appellant on 15.02.2021, which was within the excluded period. The appeal should have been filed by 17.05.2021 after excluding the pandemic period. However, the appeal was filed on 31.05.2024, well beyond the extended limitation period.

The Tribunal found the explanation regarding the accountant's departure to be an afterthought and insufficient. The appellant's own application stated receipt of the order without specifying it was through the accountant, undermining the credibility of the claimed cause. Furthermore, the appellant had appeared before the Commissioner (Appeals) on 03.02.2021, indicating awareness of the proceedings and the order's existence.

The Tribunal applied the principle from New India Insurance Co. Ltd. Vs. Smt. Shanti Mishra, which mandates that the explanation must cover the entire period of delay and cannot be partial or vague. It emphasized that while the discretion under Section 5 should be liberally construed, it is not absolute and must be exercised judiciously based on the facts.

Consequently, the Tribunal concluded that the appellant failed to provide a reasonable and credible explanation for the entire delay period, especially the delay post the excluded period ending 28.02.2022.

2. Applicability of the Covid-19 Limitation Exclusion Orders

The Tribunal extensively analyzed the Supreme Court's suo moto orders which excluded the period from 15.03.2020 to 28.02.2022 from the computation of limitation for judicial and quasi-judicial proceedings. The orders provided that any limitation expiring during this period would be extended by a further 90 days from 01.03.2022, or the actual remaining limitation period if longer.

The Tribunal acknowledged this extension but clarified that the delay beyond 28.02.2022 until 31.05.2024 was not covered by this exclusion. Therefore, the appellant was required to file the appeal within the extended limitation period after 01.03.2022. The failure to do so resulted in an inordinate and unexplained delay.

This interpretation aligns with the Supreme Court's intent to provide relief only for the pandemic period and not indefinitely beyond it.

3. Treatment of Judicial Precedents on Condonation of Delay

The appellant relied on several precedents, notably Katiji, which advocates a liberal and justice-oriented approach toward condonation of delay. The Tribunal acknowledged this principle but balanced it against the requirement that the explanation must be credible and cover the entire delay.

The Tribunal also referred to the New India Insurance Co. case, which cautions against converting the discretionary power into a rigid rule and stresses that "sufficient cause" must be demonstrated for the entire period of delay.

Further, the Tribunal cited Sitaram Ramcharan and others, emphasizing the burden on the appellant to satisfy the Court that the delay was justified for the whole period.

In this case, the Tribunal held that the appellant's explanation did not meet this threshold, and the reliance on these precedents did not aid the appellant's cause.

4. Application of Law to Facts and Final Conclusion

Applying the above legal principles and precedents to the facts, the Tribunal found:

• The appellant received the impugned order within the excluded limitation period but delayed filing the appeal for over two years after the exclusion period ended.
• The explanation of the accountant's departure was not credible or sufficient to cover the entire delay.
• The appellant's awareness of the proceedings and appearance before the Commissioner (Appeals) negates any claim of ignorance or inadvertence.
• The substantial delay of 824 days is unexplained and amounts to negligence and lack of due diligence.

Therefore, the Tribunal refused to condone the delay and dismissed the application, rendering the appeal defective and liable to be returned to the appellant.

Significant holdings include the following verbatim excerpts and core principles:

"The explanation has to cover the whole of the period of delay."

"The discretion given by Section 5 of the Limitation Act, 1963 should not be defined or crystallized so as to convert or discretionary matter into a rigid rule of law."

"The delay even after exclusion of the period, as discussed above is still substantial and the reason quoted is not sufficient to explain the same."

"The appellant was aware of the proceedings before Commissioner (Appeals) he had appeared in the matter before Commissioner (Appeals) on 3.2.2021 though through virtual mode. We find no reason for the appellant to keep waiting for more than four years for the order in such proceedings."

The Tribunal thus established that while courts should adopt a liberal approach to condonation of delay, such discretion is not unlimited and must be exercised based on credible, complete explanations covering the entire delay. The Covid-19 limitation exclusion applies only to the pandemic period and does not justify delay beyond that. Negligence or lack of due diligence cannot be accepted as sufficient cause.