2025 (7) TMI 341 - AT - Service Tax

Dismissal of appeal on the ground of time limitation - service of notice - HELD THAT - On perusal of amended section 37C of Central Excise Act It is clear that after the words sending it by registered post with acknowledgment due the words i.e. or by speed post with proof of delivery has been inserted . In the present case the order was not dispatched by registered post. The order was sent by speed post and in terms of Section 37C as quoted above there should be proof of delivery also. In the present case admittedly there is no proof of delivery. What only has been stated by the adjudicating authority in the observation is that the speed post which was sent to the appellant containing the order in original did not return to the office. Hon ble High Court Mumbai also in the case Amidev Agro Care Pvt. Ltd. v. UOI 2012 (6) TMI 304 - BOMBAY HIGH COURT held that order has to be served on the assessee or his agent by Registered Post A.D. or any other mode specified in Section 37C and mere proof of dispatch of order is not sufficient compliance of the said section. In the present case the date of receipt of order is 07.02.2023 Commissioner (Appeals) in para 16.2 has recorded that copy of the order was provided to the appellant vide letter dated 07.02.2023. Though it is simultaneously mentioned the said Order-in-Original was provided to the appellant earlier also being dispatched through Speed Post on 02.04.2022 itself. However in light of entire above discussion it stands clear that the requirement of the service of any process depends upon the proof of proper receipt of the same by the recipient. The said evidence is admittedly missing on record. Hence the date of receipt of order as mentioned in Section 85 of Finance Act 1994 is 07.02.2023. The present appeal was filed on 29.03.2023 i.e. within two months of receiving the Order-in-Original. It is accordingly held that the appeal was filed well within the period of limitation. Commissioner (Appeals) has failed to observe the same. The appeal is remanded back to Commissioner (Appeals) for the decision on the merits of the case - appeal allowed by way of remand.

Summary

The core legal questions considered by the Tribunal in this appeal are:

1. Whether the appeal filed by the appellant before the Commissioner (Appeals) was barred by limitation under Section 85 of the Finance Act, 1994.

2. Whether the service of the Order-in-Original dated 31.03.2022 on the appellant was valid and effective in terms of the amended Section 37C of the Central Excise Act, 1944 (applicable to service tax by virtue of Section 83 of the Finance Act, 1994).

3. Whether the Commissioner (Appeals) erred in dismissing the appeal on the ground of limitation without considering the appellant's submission regarding the date of receipt of the Order-in-Original.

4. The implications of the mode and proof of service of orders and notices under the statutory framework, including the effect on limitation periods for filing appeals.

Issue-wise Detailed Analysis

1. Validity and Effectiveness of Service of Order-in-Original

Legal Framework and Precedents: Section 37C of the Central Excise Act, as amended in 2013, mandates that service of any decision, order, summons, or notice under the Act must be effected either by tendering or sending by registered post with acknowledgment due or by speed post with proof of delivery. If these modes fail, alternative modes such as affixing the order at a conspicuous place are prescribed. The service is deemed complete on the date of tender or delivery supported by proof.

Precedents emphasize the mandatory nature of proof of delivery when service is effected by speed post. The Division Bench of the Madras High Court in Premier Garment Processing held that service by speed post is valid only if proof of delivery is furnished. Mere dispatch or non-return of the consignment does not constitute valid service. Similarly, the Bombay High Court in Amidev Agro Care Pvt. Ltd. v. UOI held that mere proof of dispatch is insufficient; actual service with acknowledgment is required. The Gujarat High Court in Regent Overseas Pvt. Ltd. reiterated that absence of proof of delivery renders the service ineffective. The Supreme Court in Saral Wire Craft Pvt. Ltd. clarified that notices must be served to the intended person or authorized agent with proof of acknowledgment, and any deviation renders the notice invalid. The Orissa High Court in Jay Balaji Jyoti Steels Ltd. recognized speed post with proof of delivery as a valid mode of service post-amendment.

Court's Interpretation and Reasoning: The Tribunal noted that the impugned order was sent by speed post on 02.04.2022 but no proof of delivery was furnished by the Revenue. The mere fact that the speed post consignment was not returned to the office was held insufficient to establish valid service. The Commissioner (Appeals) had relied on unamended Section 37C and assumed service by dispatch, which the Tribunal found erroneous. The amended Section 37C explicitly requires proof of delivery for service by speed post, which was absent.

Key Evidence and Findings: The record showed that the order was dispatched by speed post but no acknowledgment or proof of delivery was on record. The appellant received the order only on 07.02.2023 upon their request, and this date was accepted as the date of valid service.

Application of Law to Facts: Since valid service was not effected on the date of dispatch, limitation for filing appeal would begin only from the date of actual receipt, i.e., 07.02.2023. This interpretation aligns with the statutory mandate and judicial precedents.

Treatment of Competing Arguments: The Revenue argued that the appeal was barred by limitation as the order was dispatched on 02.04.2022 and was not returned. However, the Tribunal held that absence of proof of delivery and acknowledgment invalidates the assumption of service on the dispatch date. The appellant's contention that the appeal was filed within two months of actual receipt was accepted.

Conclusion: The service of the Order-in-Original was not validly effected on the dispatch date due to lack of proof of delivery. The date of receipt for limitation purposes is 07.02.2023.

2. Limitation for Filing Appeal under Section 85 of Finance Act, 1994

Legal Framework and Precedents: Section 85 prescribes a two-month period for filing appeals from the date of receipt of the order. The Supreme Court has emphasized that limitation is to be computed from the date of valid service or receipt of the order. The Apex Court in Collector Land Acquisition Anantnag v. Mst. Katiji and N. Balakrishna v. M. Krishnamurthy highlighted that the reason for delay is more significant than the length of delay and that limitation cannot be reckoned from a date when the appellant was not in possession of the order.

Court's Interpretation and Reasoning: The Tribunal observed that the Commissioner (Appeals) failed to consider the appellant's submission and evidence regarding the actual date of receipt. The Commissioner mechanically dismissed the appeal as barred by limitation based on the dispatch date. The Tribunal found this approach contrary to the principles of natural justice and statutory requirements.

Key Evidence and Findings: The appellant filed the appeal on 29.03.2023, within two months of receipt of the order on 07.02.2023. The Commissioner (Appeals) did not dispute the date of receipt but disregarded it for limitation purposes.

Application of Law to Facts: Since the date of valid service is 07.02.2023, the appeal filed on 29.03.2023 is within the prescribed limitation period. The dismissal on limitation grounds was therefore unsustainable.

Treatment of Competing Arguments: The Revenue's reliance on the dispatch date and absence of returned consignment was rejected. The Tribunal emphasized the statutory requirement of proof of delivery and actual receipt.

Conclusion: The appeal was filed within the limitation period as computed from the date of valid receipt of the Order-in-Original.

3. Procedural Fairness and Natural Justice

Legal Framework and Precedents: The principles of natural justice require that a party must be given a fair opportunity to be heard and that notices and orders must be served properly. The Gujarat High Court in Regent Overseas highlighted that absence of valid service violates natural justice and renders ex parte orders vulnerable.

Court's Interpretation and Reasoning: The Tribunal noted that the appellant was deprived of a fair hearing due to non-receipt of the order and consequent dismissal of the appeal on technical grounds. The Tribunal directed that the appeal be remanded to the Commissioner (Appeals) for decision on merits after providing sufficient hearing.

Key Evidence and Findings: The appellant's request for copy of the order and subsequent filing of appeal within limitation demonstrate their intent to contest the demand. The lack of proof of delivery deprived them of opportunity to respond earlier.

Application of Law to Facts: The Tribunal applied the principle that limitation should not be used to cause prejudice to the appellant when valid service was not effected. It ordered fresh adjudication after proper hearing.

Treatment of Competing Arguments: The Revenue's contention to dismiss on limitation was rejected in view of procedural fairness and statutory requirements.

Conclusion: The appeal is remanded for fresh adjudication after providing the appellant an opportunity of personal hearing.

Significant Holdings

"It is clear that after the words 'sending it by registered post with acknowledgment due' the words i.e. 'or by speed post with proof of delivery' has been inserted."

"In the present case admittedly, there is no proof of delivery. What only has been stated by the adjudicating authority in the observation is that the speed post which was sent to the appellant containing the order in original did not return to the office."

"It is trite law that limitation has to be reckoned only from the date when the actual service has been effected, subject to fulfilling the mandatory requirement of showing proof of delivery."

"The requirement of the service of any process depends upon the proof of proper receipt of the same by the recipient. The said evidence is admittedly missing on record. Hence the date of receipt of order as mentioned in Section 85 of Finance Act, 1994 is 07.02.2023."

"The present appeal was filed on 29.03.2023 i.e. within two months of receiving the Order-in-Original. It is accordingly held that the appeal was filed well within the period of limitation."

"The order under challenge (Order-in-Appeal dated 20.06.2024) is hereby set aside. The appeal is remanded back to Commissioner (Appeals) for the decision on the merits of the case. It is also required that the appeal be decided within three months from the date of receipt of the present order that too after providing sufficient hearing of the appellant."

The Tribunal established the core principle that valid service of orders and notices under the Central Excise Act and Finance Act requires proof of delivery when sent by speed post, failing which the limitation period for filing appeals commences only from the date of actual receipt. The mere dispatch or non-return of a postal consignment does not constitute valid service. This principle safeguards the appellant's right to fair hearing and prevents dismissal of appeals on technical grounds of limitation when the appellant was unaware of the order.

On the facts, the Tribunal concluded that the appeal was filed within the prescribed limitation period computed from the date of actual receipt of the Order-in-Original. The dismissal of the appeal by the Commissioner (Appeals) on limitation grounds was set aside, and the matter was remanded for fresh adjudication on merits after providing the appellant an opportunity of personal hearing.