Service Tax - No Condonation of Delay in Appeals Filed by Assessee?

By Vijay Kumar

AS per Section 86(5) of the Finance Act, 1994,

"(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4) if it is satisfied that there was sufficient cause for not presenting it within that period."

Sub-section (3) pertains to the appeal filed by the Department on review by the Committee of Chief Commissioners or Commissioners.

Sub-section (4) pertains to the memorandum of cross-objections filed by the Department or the assessee on the appeal filed by the other party.

So, we have a provision for condonation of delay for an appeal filed by the Department or the Cross objection filed by either party.

But WHAT ABOUT THE APPEAL FILED BY THE ASSESSEE? IS THERE NO CONDONATION OF DELAY? IT APPEARS SO.

The Appeal by the assessee is covered by Sub-section (1) of Section 86 and Section 86(5), which empowers the Tribunal to condone the delay, does not mention Section 86(1) and so there is no provision to condone the delay in filing appeals by the assessee before Tribunal.

Let us see the provisions under Central Excise and Customs:

Central Excise:

Section 35B(5) reads as:

(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period .

Section 35B(3) deals with appeals by both the Department and the assessee.

Section 35B(4) deals with Cross Objections by both sides.

So, in Central Excise, the Tribunal has the power to condone delay in appeals filed by the assessees.

Customs: Similar is the situation in Customs. Section 129A(5) reads as:

(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause for not presenting it within that period .

Section 129A(3) deals with appeals by both the Department and the assessee.

Section 129A(4) deals with Cross Objections by both sides.

So, in Customs also, the Tribunal has the power to condone delay in appeals filed by the assessees.

But why no such provision in Service Tax? Can the Tribunal condone the delay in filing an appeal by an assessee?

This was actually a mischief brought in by the 2012 Budget and honestly, we in TIOL also did not notice the grave error. Prior to the Finance Act 2012, Section 86(3) covered limitation for all appeals - by the Department as well as the assessee, but the amendment of 2012 took the limitation for assessee's appeal outside the purview of Section 86(3) and thereby out of Section 86(5), which means that from 28.5.2012, the Tribunal has no power to condone the delay in filing an appeal by an assessee! STRANGE BUT TRUE!

But our Babus are clever - they smuggled in an amendment in this Budget silently. Clause 93 (I) of the Finance Bill 2013 proposes an amendment in Section 86(5) as: "(I) in section 86, in sub-section (5), for the word, brackets and figure "sub-section (3)", the words, brackets and figures "sub-section (1) or sub-section (3)" shall be substituted;"

So, now sub-section (1) also finds a place in Sub-section (5) and so the appeals by the assessees are also covered under condonation of delay by the Tribunal.

The JSTRU letter is totally silent about this - well how can they talk about the surreptitious correction of their last year's blunder? This is the transparent administration that we are promising our innocent people!

However, the Notes on Clauses on the Finance Bill presented to Parliament mentions:

Sub-clause (I) seeks to amend sub-section (5) of section 86 of the said Chapter to empower the tribunal to condone the delay in filing appeal or cross objection by the assessee also.

Will the Hon'ble Minister tell the Parliament why the Tribunal was not empowered earlier to condone the delay in filing the appeal by the assessee?

Even now, that is till the Finance Bill 2013 is enacted, the Tribunal has no power to condone delay in an appeal filed by the assessee. And what would happen in cases where Tribunal has already granted condonation after 28.5.2012?

Our Research was triggered off by an innocent question by a senior officer, "Finance Bill proposes to amend Section 86(5) of the Finance Act in respect of Service Tax. Is there a reason why similar amendment is not being made in Central Excise/customs law?" Obviously, there was no need for changes in the other laws - only the blunder in Service Tax had to be corrected.