M/S Smile Electronics Limited vs. Office Of The Commissioner Of Central Tax Appeals - I

Held

The Court held that the impugned order dated 8.7.2020 passed by the Commissioner of Central Tax (Appeals-I) is quashed. The Court found it indisputable that the Petitioner was not heard by the first Respondent, leading to a violation of the principles of natural justice. Consequently, the appeal in No.338/2020 is restored on the file of the first Respondent for reconsideration. The Petitioner is granted liberty to file an application for condonation of delay, if not already filed. The first Respondent is directed to consider such application strictly in accordance with the provisions of the Central Excise Act, 1944, and applicable law, including the jurisdiction to entertain an appeal beyond the prescribed period. The Petitioner is also directed to appear before the first Respondent on 21.12.2020 and file the application for condonation of delay on the next date of hearing or within further time granted by the first Respondent.

Facts

M/s. Smile Electronics Limited (Petitioner) filed a writ petition challenging an order dated 8.7.2020 passed by the Commissioner of Central Tax (Appeals-I) (Respondent No. 1). The appeal before Respondent No. 1 was filed against an order dated 9.9.2019. The Petitioner contended that their appeal was rejected solely on the grounds of being time-barred under Section 35 of the Central Excise Act, 1944, and beyond the condonable period, without affording them a hearing. The Petitioner claimed they received the order dated 9.9.2019 only on 27.9.2019 and were under the impression that a declaration could be filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. However, their employees failed to file the necessary declaration, leading to a belated appeal. The Petitioner argued that they should have been given an opportunity to explain the delay.

Key Issues

1. Whether the appeal filed by the Petitioner before the first Respondent was rejected in violation of the principles of natural justice, specifically by not providing an opportunity to be heard regarding the delay in filing the appeal, contrary to the provisions of Section 35 of the Central Excise Act, 1944? The Petitioner argued that the rejection of their appeal solely on the grounds of limitation, without providing an opportunity to explain the delay and justify the merits of the belated appeal, constitutes a violation of natural justice. They contended that they should have been heard on the reasons for the delay, including their mistaken belief about the Sabka Vishwas Scheme and the failure of their employees to file the declaration. The Respondents, through their counsel, conceded that if the contention is that the Petitioner did not have a reasonable opportunity to show cause for condonation of delay and justify the merits, the petition could be allowed and the matter restored for reconsideration. They acknowledged that the appeal was decided without affording the Petitioner an opportunity to be heard, thus violating principles of natural justice.