Dismissed

N.J.Constructions v. the Commissioner of Central Excise

Kerala HC26 Mar 2018C.E.Appeal/9/2018

Case brief

AI extract

What is this about?

This Court dismissed the C.E. Appeal and related delay condonation application. The appellant, challenging a remand order with conditions, failed to demonstrate sufficient cause for the significant delay. The Court found the Tribunal's conditions reasonable and dismissed the challenge. However, the Court allowed the appellant two months to comply with the deposit condition before revenue recovery

What did the court decide?

Appeal and delay condonation application dismissed; department given two months to verify compliance before resuming recovery.

N.J.Constructions Vs the Commissioner of Central Excise — Service and Employment | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON

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MONDAY, THE 26TH DAY OF MARCH 2018 / 5TH CHAITHRA, 1940

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C.E.Appeal.No.9 of 2018

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AGAINST THE FINAL ORDER NO.21827/2014 DATED 29.09.2014 / 16.10.2014 IN APPEAL NO.ST/25475/2013-DB OF CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, BANGALORE.

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APPELLANT(S):

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N.J.CONSTRUCTIONS, REPRESENTED BY PROP. JUSTIN NAGAN, KARIMPOYIL HOUSE, IRINGADAMPALLY ROAD, CHEVAYUR, CALICUT.

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BY ADV.SRI.AJAY V.ANAND.

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RESPONDENT(S):

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THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-CALICUT, CR BUILDING, MANANCHIRA, CALICUT, KOZHIKODE-673001.

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BY STANDING COUNSEL SRI.THOMAS MATHEW NELLIMOOTTIL.

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THIS CENTRAL EXICISE APPEAL HAVING BEEN FINALLY HEARD ON 26-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:-

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C.E.APPEAL NO.9 OF 2018

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APPENDIX

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APPELLANT'S ANNEXURES:-

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ANNEXURE A TRUE COPY OF THE SHOW CAUSE NOTICE NO.36/2011/ST DATED 20.04.2011. ANNEXURE B TRUE COPY OF THE ORDER-IN-ORIGINAL NO.06/2012 ST DATED 31.08.2012.

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ANNEXURE C ATTESTED COPY OF THE FINAL ORDER NO.21827/2014 DATED 29.09.2014 IN APPEAL NO.ST/25475/2013-DB OF THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL.

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RESPONDENT'S ANNEXURES:NIL.

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Vku/ [ true copy ]

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K. Vinod Chandran & Ashok Menon, JJ.

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C.E.Appeal No.9 of 2018 & C.M.Appln.No.132 of 2018

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Dated, this the 26^th day of March, 2018

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JUDGMENT

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Vinod Chandran, J:

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Though the learned Counsel for the appellant attempted to argue the matter on merits, on grounds of there being absolutely no cause for imposing service tax on the appellant and the quantification being blatantly wrong; we did not permit such argument noticing the order which has been challenged before this Court. Admittedly an ex parte order was passed for a demand of service tax of Rs.63,73,330/- for the period between 2005 and 2010; with interest. Penalties were also imposed. The assessee, the appellant herein, was before the Tribunal against the ex parte order. The appellant pleaded ignorance of provisions of law. The Tribunal specifically queried him; but the appellant did not reply as to why the show cause notice was not responded to or why there was absence for personal hearing; both of which were admitted. However, considering the plea of the learned Counsel who appeared for the appellant before the Tribunal that the appellant is illiterate and did not get proper advise, the Tribunal despite the stiff opposition from the Revenue, directed the matter to be considered afresh; but on terms.

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C.E.Appeal No.9/2018

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In deciding the terms, the Tribunal found that the appellant should deposit the service tax which may be due; but, presumably noticing that there were contentions raised on the computation as also on the very liability, the Tribunal directed an amount of Rs.15,00,000/to be paid within eight weeks. The order was passed on 16.10.2014. An appeal challenging the condition imposed is filed with a delay of 1061 days.

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We find that the Tribunal found the appellant to have been negligent in not even replying to the show cause notice; but had taken into account the plea of the learned Counsel appearing for the appellant of the illiteracy of the appellant/assessee and the lack of sound advise and directed a remand on condition. If the appellant had a difficulty or objection to the conditions, he should have filed an appeal at the appropriate time. Neither did he approach this Court within the time as provided in the statute or a reasonable period after such limitation expired.

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The learned Counsel appearing for the appellant would vehemently argue that the order was never communicated to the assessee. We are, however, not inclined to accept such a contention especially noticing that the order has the recital “Operative portion of the order has been pronounced in open court”. We also notice that the appeal had been filed by the assessee and

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C.E.Appeal No.9/2018

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when an order of remand is made on condition, it was incumbent upon the assessee to have obtained a certified copy and complied with the condition imposed. We find the explanation for non compliance of the condition directed and the delay in challenging the order to be not satisfactory. We also do not find any reason to interfere with Annexure-C order, especially in the context of the Tribunal having directed only remittance of less than one-fourth of the amounts demanded.

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The learned Counsel also has a contention that when the Tribunal directed deposit of the amounts which may be due, there is a ground of pre-judging the issue and pre-empting the original authority in deciding as to whether there is a liability at all or not. The learned Counsel also relies on the decision of the Honourable Supreme Court in (2015) 15 SCC 659 [ GMG Engineering Industries & Ors. v. ISSA Green Power Solution & Ors. ] . The Hon'ble Supreme Court had cautioned the trial Courts as also the High Court from imposing onerous and unreasonable conditions when the issue itself was not adjudicated and trial had not commenced. We are not convinced that the decision has any application in the instant case and if at all it has, it aids the Revenue. There the appellant was the defendant in two suits for recovery of money, which were decreed ex-parte. On restoration

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C.E.Appeal No.9/2018

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sought the trial Court directed deposit of the entire amounts claimed in the suits; ie: Rs.1,60,00,000/- It was in that context the Apex Court held the condition for restoration of a suit decreed ex-parte even before trial, to be too onerous. We cannot but notice that, at the time of admission, the Supreme Court itself had directed deposit of Rs.50,00,000/-; almost one-third of the amount demanded.

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We cannot but notice the following paragraph of the

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decision:

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“7. It is well settled that the expression “sufficient cause” is to receive liberal construction so as to advance substantial justice. When there is no negligence, inaction or want of bona fide is imputable to the appellants, the delay has to be condoned. The discretion is to be exercised like any other judicial discretion with vigilance and circumspection. The discretion is not to be exercised in any arbitrary, vague or fanciful manner. The true test is to see whether the applicant has acted with due diligence”.

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We essentially notice that in the instant case the assessee cannot be termed to have acted with diligence. The assessee did not respond to the show-cause, failed to appear for personal hearing and challenged the order on grounds of ignorance of law. Then when the Tribunal allowed fresh consideration on terms, the condition imposed was not complied. The assessee now challenge the terms imposed as onerous and unreasonable after about three

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C.E.Appeal No.9/2018

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years when the liability of interest would have doubled or tripled the demand as applicable at this point, if an imposition is made. Further as noticed above the Supreme Court had directed deposit of about 1/3^rd of the amount in the plaint claim. Here the Tribunal directed payment of less than 1/4^th of the amount demanded. We do not discern any unreasonableness, in the condition imposed.

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We do not think that there is sufficient cause to condone the delay or interfere with the order passed. Hence, the delay condonation application as also the appeal are dismissed. Even then, if the appellant-assessee complies with the condition of deposit as directed by the Tribunal within two months from today, the Department would re-do the matter and would also look at whether the contention that the liability itself would not survive is applicable in the case of the assessee or not. If the appellant does

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not comply with the condition, necessarily the Department would proceed with the recovery.

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Ordered accordingly, with the reservation as above.

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vku/-

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[ true copy ]

N.J.Constructions v. the Commissioner of Central Excise

Case brief

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N.J.Constructions v. the Commissioner of Central Excise

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