2025 (7) TMI 642 - AT - Service Tax

Rejection of appeal on the ground of delay - Taxability - payment for sponsorship - reverse charge mechanism - HELD THAT - The impugned order records that the original order was dispatched on 02.11.2023 by Registered Post Acknowledgment Due (RPAD); Postal Department confirmed that the said order was delivered on 04.11.2013; the last date for filing the appeal was 02.02.2014 and whereas the appellant has filed the appeal on 13.08.2014 beyond the condonable period. On the other hand the appellants contend that they received the uncertified copy of the order on 04.07.2014 pursuant to their letters 06.05.2014 17.06.2014 and they have filed the appeal in time; they have also filed an affidavit to the effect that the order was not received by them before 04.07.2014 and enquiries made with the postal authorities revealed that the concerned post person was irregular. It is found that though the Department claims to have dispatched the original order they did not produce the copy of the acknowledgment which would have been sent by the postal authorities; they rely on the clarification given by the postal authorities vide letter dated 24.07.2014 that the said order was delivered on 04.11.2013. Though there are conflicting claims taking into consideration the affidavit filed by the appellants and the general principle that the appellants do not gain in any manner by delaying the appeal there is no reason as to why the claim of the appellants should be dismissed and it is also inclined to condone the delay if any that occurred. The appeal is allowed by way of remand to Commissioner (Appeals) while condoning the delay. It is directed that Commissioner (Appeals) decide the issue on merits within 12 weeks of receipt of this order as far as possible.

Summary

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

1. Whether the appellant received the original Order-in-Original dated 29.10.2013 within the prescribed time for filing an appeal;

2. Whether the appeal filed by the appellant on 13.08.2014 was barred by delay and, if so, whether such delay is liable to be condoned;

3. Whether the Commissioner (Appeals) was justified in rejecting the appeal solely on the ground of delay without examining the merits of the case;

4. The applicability of the Reverse Charge Mechanism on the payment made by the appellant to the Punjab Sports Club for sponsorship of the World Cup Kabaddi Tournament 2011 (though this issue was not adjudicated upon in the present order, it forms the background).

Issue 1: Receipt of the Original Order and Timeliness of Appeal

The legal framework governing the receipt of orders and filing of appeals is contained in the relevant service tax procedural provisions, which require that the appeal be filed within 90 days from the date of receipt of the Order-in-Original. The date of receipt is crucial for computing limitation.

The Department relied on the dispatch of the original order by Registered Post Acknowledgment Due (RPAD) on 02.11.2013 and a confirmation letter from postal authorities dated 24.07.2014 stating delivery on 04.11.2013. However, the Department failed to produce the postal acknowledgment receipt or any proof of delivery signed by the appellant. The appellant contended that they did not receive the original order until 04.07.2014, when they received an uncertified copy following their repeated requests dated 06.05.2014 and 17.06.2014. An affidavit was filed by the appellant affirming non-receipt of the original order before 04.07.2014. Enquiries with postal authorities revealed irregularities, including that the concerned postal person was irregular.

The Tribunal noted the conflicting claims but emphasized the principle that appellants do not gain by delaying appeals and that procedural delays should not be used to defeat substantive rights. The absence of an acknowledgment receipt from the Department weakened their claim of timely delivery. The Tribunal relied on precedents such as the decision in S.A. Engineering Works - 2013 (295) ELT 236 (Tri. Ahmd.) which supports condonation of delay where there is credible evidence of non-receipt of orders within the prescribed time.

Accordingly, the Tribunal found that the appellant's claim of delayed receipt was plausible and accepted that the limitation period should be computed from 04.07.2014, the date of actual receipt of the order copy.

Issue 2: Condonation of Delay

The appeal was filed on 13.08.2014, which was beyond the original limitation period ending on 02.02.2014 but within two months of the actual receipt of the order copy on 04.07.2014. The Commissioner (Appeals) rejected the appeal on the ground of delay without condoning it.

The Tribunal analyzed the circumstances and held that since the delay was caused due to non-receipt of the order, which was beyond the appellant's control, the delay was liable to be condoned. The Tribunal emphasized the principle of substantial justice over technicalities and stated that procedural delays should not be used to deny the appellant the right to be heard on merits.

The Tribunal thus exercised its discretionary power to condone the delay and allowed the appeal to be heard on merits.

Issue 3: Rejection of Appeal Solely on Ground of Delay Without Adjudicating Merits

The Tribunal observed that the Commissioner (Appeals) dismissed the appeal without considering the substantive issues raised by the appellant. The Tribunal underscored the importance of adjudicating appeals on merits and not merely on procedural grounds.

By remanding the matter back to the Commissioner (Appeals) with directions to decide on merits within 12 weeks, the Tribunal reinforced the principle that every appeal deserves a fair and substantive hearing once the procedural hurdle of limitation is overcome or condoned.

Issue 4: Taxability of Sponsorship Payment under Reverse Charge Mechanism

Though the background of the case involves the allegation that the payment of Rs.5 Lakhs by the appellant to Punjab Sports Club for the Kabaddi tournament sponsorship is taxable under the Reverse Charge Mechanism, this issue was not adjudicated in the present order. The Tribunal's decision was limited to procedural aspects concerning the appeal's limitation and condonation of delay.

Significant Holdings and Core Principles

The Tribunal held, inter alia:

"Though there are conflicting claims, taking into consideration the affidavit filed by the appellants and the general principle that the appellants do not gain in any manner by delaying the appeal, we are of the considered opinion that there is no reason as to why the claim of the appellants should be dismissed and we are also inclined to condone the delay, if any, that occurred."

"The appeal is allowed by way of remand to Commissioner (Appeals) while condoning the delay. It is directed that Commissioner (Appeals) decide the issue on merits within 12 weeks of receipt of this order as far as possible."

The core principles established include:

• The limitation period for filing an appeal runs from the date of actual receipt of the Order-in-Original, not merely from the date of dispatch.
• Where there is credible evidence of non-receipt of orders within the prescribed time, the delay in filing appeal is liable to be condoned.
• Appellants should not be deprived of their right to appeal on technical grounds where delay is caused by factors beyond their control.
• Appellate authorities must adjudicate appeals on merits once the limitation hurdle is cleared or condoned, rather than dismissing appeals solely on procedural grounds.

On the facts, the Tribunal concluded that the appellant's appeal was filed within time from the date of actual receipt of the order copy, and any delay was liable to be condoned. Consequently, the appeal was remanded to the Commissioner (Appeals) for adjudication on merits within a stipulated time frame.