2025 (6) TMI 264 - AT - Service Tax

Rejection of department s appeal without going into the merits of the case only on the ground that the Review Order/Direction Order dated 13.02.2023 has not been passed within the time limit prescribed under Section 84 of FA - HELD THAT - In view of the facts the impugned order dismissing the appeal of the department only on the ground that there is a delay in passing the Review Order/Direction Order is not sustainable in law. More so when the appeal filed by the department before the Commissioner (Appeals) is within the time limitation as prescribed under the rules therefore we set aside the impugned order and remand the matter back to the learned Commissioner (Appeals) with a direction to decide the appeal on merits after following the principles of natural justice and thereafter pass a reasoned order in accordance with law within the period of three months from the date of receipt of the certified copy of this order. The appeal is allowed by way of remand.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the Review Order/Direction Order issued by the original authority was passed within the time limit prescribed under Section 84 of the relevant ActRs.

- Whether the appeal filed by the department before the Commissioner (Appeals) was within the prescribed limitation period following the Review Order/Direction OrderRs.

- Whether the impugned order of the Commissioner (Appeals) dismissing the department's appeal solely on the ground of delay in passing the Review Order/Direction Order is legally sustainableRs.

- Whether the Commissioner (Appeals) was correct in not adjudicating the appeal on merits due to the alleged procedural delayRs.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Timeliness of the Review Order/Direction Order under Section 84

Relevant legal framework and precedents: Section 84 of the Act stipulates that a Review Order or Direction Order for filing an appeal before the Commissioner (Appeals) must be passed within three months from the date of communication of the original Order-in-Original. The purpose of this provision is to ensure timely review and prevent undue delay in appellate proceedings.

Court's interpretation and reasoning: The original Order-in-Original was passed on 31.10.2022 but was communicated to the department on 14.11.2022. The department contended that the three-month limitation period for passing the Review Order/Direction Order runs from the date of communication (14.11.2022), not the date of passing the original order. The Review Order/Direction Order was passed on 13.02.2023, which falls within three months from 14.11.2022.

Key evidence and findings: The date of communication of the original order (14.11.2022) is critical in computing the limitation period. The impugned order wrongly considered the date of passing the order (31.10.2022) as the starting point, leading to an erroneous conclusion of delay.

Application of law to facts: The limitation period under Section 84 should be calculated from the date of communication, not the date of passing the original order. Since the Review Order/Direction Order was passed on 13.02.2023, it was within the prescribed three-month period.

Treatment of competing arguments: The Commissioner (Appeals) held that the Review Order was beyond the prescribed period, relying on the date of passing the original order rather than the communication date. The Tribunal rejected this interpretation as incorrect and inconsistent with the procedural fairness and statutory intent.

Conclusion: The Review Order/Direction Order was validly passed within the statutory time limit prescribed under Section 84.

Issue 2: Timeliness of the appeal filed before the Commissioner (Appeals)

Relevant legal framework and precedents: The appeal against the Review Order/Direction Order must be filed within one month from the date of communication of the said Review Order, as per the procedural rules under the Act.

Court's interpretation and reasoning: The department filed the appeal on 21.02.2023, which is within one month from the communication of the Review Order/Direction Order dated 13.02.2023.

Key evidence and findings: The appeal was filed timely after the Review Order was communicated.

Application of law to facts: The appeal complies with the limitation period prescribed for filing appeals under the Act.

Treatment of competing arguments: No contrary submissions were made regarding the timeliness of the appeal filing.

Conclusion: The appeal before the Commissioner (Appeals) was filed within the prescribed limitation period.

Issue 3: Legality of dismissal of appeal solely on ground of delay in Review Order

Relevant legal framework and precedents: Appeals should ordinarily be adjudicated on merits unless barred by law or procedural rules. Dismissing an appeal merely on a procedural ground without considering substantive issues is generally discouraged unless the procedural lapse is fatal and irremediable.

Court's interpretation and reasoning: The Commissioner (Appeals) dismissed the department's appeal without examining the merits, solely on the ground that the Review Order was passed beyond the prescribed time limit. The Tribunal found this approach legally untenable because the Review Order was actually passed within time.

Key evidence and findings: The impugned order did not address the substantive dispute regarding the alleged suppression of taxable services and the consequent tax demand.

Application of law to facts: Since the procedural objection was not valid, the appeal deserved to be heard on merits. The department's substantive grievance relating to the original demand and its subsequent dropping required adjudication.

Treatment of competing arguments: The department argued for merits consideration, which was accepted by the Tribunal. The absence of respondent's representation did not preclude adjudication on merits.

Conclusion: The dismissal of the appeal solely on procedural ground was not sustainable; the appeal must be decided on merits.

Issue 4: Direction for remand and further proceedings

Court's interpretation and reasoning: The Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) with clear directions to decide the appeal on merits after affording the parties an opportunity in accordance with principles of natural justice.

Key evidence and findings: The procedural irregularity warranted remand to ensure fair adjudication.

Application of law to facts: The Tribunal's order ensures compliance with statutory time limits and procedural fairness.

Treatment of competing arguments: No objections to remand were raised.

Conclusion: Matter remanded for merits adjudication within three months from receipt of certified copy of the order.

3. SIGNIFICANT HOLDINGS

"In view of the above facts, the impugned order, dismissing the appeal of the department only on the ground that there is a delay in passing the Review Order/Direction Order, is not sustainable in law."

"The period of three months to pass the Review Order/Direction Order starts from the date when the Order-in-Original is communicated."

"The appeal filed by the department before the Commissioner (Appeals) is within the time limitation as prescribed under the rules."

"We set aside the impugned order and remand the matter back to the learned Commissioner (Appeals) with a direction to decide the appeal on merits after following the principles of natural justice and thereafter, pass a reasoned order in accordance with law within the period of three months from the date of receipt of the certified copy of this order."

Core principles established include the correct computation of limitation periods from the date of communication of orders rather than the date of passing orders, and that appeals should be adjudicated on merits unless barred by valid procedural grounds. Procedural timelines under Section 84 are mandatory but must be interpreted in line with communication dates to avoid injustice.

Final determinations:

- The Review Order/Direction Order was validly passed within the prescribed three-month period.

- The appeal filed before the Commissioner (Appeals) was within the prescribed one-month limitation period.

- The impugned order dismissing the appeal solely on the ground of delay was set aside.

- The matter was remanded for merits adjudication in accordance with law and principles of natural justice.