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2025 (7) TMI 346 - AT - Service Tax


1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal were:

  • Whether the appeal filed before the Commissioner (Appeals) was barred by limitation under Section 85 of the Finance Act, 1994;
  • The date of receipt of the Order-In-Original by the appellant, which determines the limitation period for filing the appeal;
  • The validity and sufficiency of service of the Order-In-Original on the appellant, particularly in the absence of proof of delivery of the order dispatched by post;
  • The applicability and interpretation of statutory provisions governing service of orders and notices, specifically Section 37C of the Central Excise Act, 1944 (as applicable to service tax cases by virtue of Section 83 of the Finance Act, 1994);
  • The discretion and obligation of the Commissioner (Appeals) to condone delay in filing the appeal when the appeal was filed within the condonable period;
  • The principles governing reckoning of limitation periods in cases of disputed or defective service of orders and notices.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the appeal was barred by limitation under Section 85 of the Finance Act, 1994

The relevant legal framework is Section 85 of the Finance Act, 1994, which prescribes the limitation period for filing appeals before the Commissioner (Appeals). The limitation period is two months from the date of receipt of the Order-In-Original, with a further condonable period of one month at the discretion of the Commissioner (Appeals).

The Tribunal examined the date of receipt of the Order-In-Original by the appellant, which was disputed. The appellant claimed receipt only on 26.08.2022, although the department contended that the order was dispatched on 29.04.2022 and the postal authority did not return the post undelivered.

Applying the law, the Tribunal emphasized that limitation runs from the date of actual receipt of the order, not from the date of dispatch, especially when proof of delivery is absent. The Tribunal relied on authoritative precedents that mandate proof of delivery for valid service and reckoning of limitation.

The Tribunal concluded that since the appellant received the order only on 26.08.2022, the appeal filed on 11.11.2022 was within the statutory two-month period plus the condonable one-month period. Therefore, the appeal was not barred by limitation.

Issue 2: Validity and sufficiency of service of the Order-In-Original

The Tribunal analyzed the statutory provisions governing service of orders, primarily Section 37C of the Central Excise Act, 1944, which applies mutatis mutandis to service tax matters by virtue of Section 83 of the Finance Act, 1994. The section requires service of orders and notices by registered post with acknowledgment due or by speed post with proof of delivery.

The Tribunal noted that the Order-In-Original was dispatched by ordinary post without registered acknowledgment or proof of delivery. The department's only evidence was that the post was not returned undelivered, which is insufficient to establish valid service.

Several precedents were cited to reinforce this principle:

  • The Division Bench ruling that service by speed post requires proof of delivery and prior to its statutory recognition, such service was not binding;
  • The Bombay High Court's decision that mere proof of dispatch is insufficient and service must be effected by registered post A.D. or other prescribed modes;
  • The Gujarat High Court's ruling emphasizing the mandatory requirement of proof of delivery for service by speed post;
  • The Supreme Court's judgment invalidating service of orders on unauthorized persons (e.g., kitchen boy) and underscoring strict compliance with Section 37C;
  • The Orissa High Court's recognition that speed post with proof of delivery is equivalent to registered post for service purposes.

Applying these precedents, the Tribunal held that the department failed to prove valid service of the Order-In-Original on the appellant.

Issue 3: Discretion to condone delay and principles governing limitation

The Tribunal acknowledged the principle that delay in filing appeals should not be condoned lightly, referencing the Apex Court's rulings that no one should cause prejudice to themselves by belated appeals and that reasons for delay have primacy over the length of delay.

However, in the present case, since the appeal was filed within the condonable period, the Commissioner (Appeals) was obligated to condone the delay. The failure to do so was found to be erroneous.

Issue 4: Application of law to facts and treatment of competing arguments

The appellant's contention that the order was received only on 26.08.2022 was accepted due to the absence of proof of delivery of the order dispatched earlier. The department's argument relying on non-return of post was rejected as insufficient evidence of valid service.

The Tribunal applied the legal principles and precedents mandating proof of delivery and actual receipt before limitation can commence. The competing arguments were weighed in light of statutory mandates and judicial precedents, favoring the appellant's position on the date of receipt and limitation reckoning.

3. SIGNIFICANT HOLDINGS

The Tribunal held:

"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 26.08.2022."

"The present appeal was filed on 11.11.2022 i.e. beyond the statutory period of two months but within the condonable period of one month. It is accordingly held that the appeal was filed well within the period of limitation."

"The appeal filed by the Appellant is allowed by way of remand to the Learned Commissioner (Appeals) for decision on merits after providing sufficient hearing."

The core principles established include:

  • Limitation for filing appeals under Section 85 of the Finance Act, 1994 runs from the date of actual receipt of the order, not from the date of dispatch;
  • Service of orders and notices must comply with Section 37C of the Central Excise Act, 1944 (as applicable), requiring service by registered post with acknowledgment or speed post with proof of delivery;
  • Proof of delivery is mandatory for valid service; mere proof of dispatch or non-return of postal articles is insufficient;
  • In the absence of valid service, limitation does not commence, and appeals filed thereafter cannot be held barred;
  • The Commissioner (Appeals) must condone delay if the appeal is filed within the condonable period and sufficient cause is shown;
  • Strict adherence to principles of natural justice and procedural compliance is essential for valid adjudication.

 

 

 

 

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