Shree Shyam Steel Co. vs. Commissioner Of Central Tax, CGST And Central Excise

Held

The High Court held that the learned Tribunal was not justified in adopting a hyper-technical approach. The Court found that the expression "sufficient cause" under Section 5 of the Limitation Act, 1963, must be liberally construed to advance the cause of justice, preferring substantial justice over technical considerations, as per Collector, Land Acquisition, Anantnag v. Katiji (1987) 2 SCC 107. The Court noted that the SVLDRS was a beneficial scheme and applying for it indicated an intent to resolve liability, not mala fide conduct. Regarding the "initial lethargy," the Court stated that the law of limitation is not an "extinguishing engine" for substantive rights, and a broader view should be taken of the preceding period when the subsequent delay was rooted in a bona fide pursuit of a settlement scheme. The Court also considered the disruption caused by the COVID-19 pandemic, referencing the Supreme Court's direction to exclude the period from 15.03.2020 to 28.02.2022 for limitation purposes, finding the Tribunal's expectation of daily portal monitoring during this time unrealistic. The Court emphasized that the length of the delay is irrelevant; the acceptability of the explanation matters, citing N. Balakrishnan v. M. Krishnamurthy. The Order-in-Original imposed a penalty of Rs. 10,23,864/-. The Court allowed the appeal, set aside the Interim Order, condoned the delay of 2262 days subject to the Appellant paying Rs. 10,000/- as costs to the Respondent, and directed the CESTAT to restore the appeal and decide it on merits.

Facts

The Appellant, Shree Shyam Steel Co., filed an appeal before the High Court at Calcutta against an interim order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The CESTAT had refused to condone a delay of 2262 days in filing a statutory appeal against an Order-in-Original. The statutory limitation for filing the appeal expired on 10.04.2018, but the appeal was filed on 28.03.2024. The Appellant's explanation for the delay was their bona fide reliance on the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS). They filed an application under this scheme on 18.12.2019 and claimed to be unaware of its rejection until late 2023. The CESTAT dismissed the application, citing unaccounted delay between April 2018 and December 2019, and the availability of rejection status on a public portal since 20.01.2020.

Key Issues

1. Whether the learned Tribunal was justified in adopting a hyper-technical approach by refusing to condone the delay, thereby extinguishing the Appellant’s right to challenge a significant financial penalty on merits, especially when the delay was attributed to the pursuit of a State-sponsored Amnesty Scheme? The Appellant argued that the Tribunal's decision was based on an unduly technical and rigid interpretation. They relied on N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, asserting that "sufficient cause" must be liberally construed, with the acceptability of the explanation being the sole criterion, irrespective of the delay's length. The Revenue contended that the Tribunal was justified in its decision, highlighting the gross negligence in the initial delay period and the Appellant's failure to verify the publicly accessible online status for nearly four years, which evinced a profound lack of diligence.