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2019 DIGILAW 1244 (KAR)

Mysore Hotel Complex v. Union Of India

2019-06-13

S.SUJATHA

body2019
JUDGMENT : S. Sujatha, J. Learned counsel Sri. Jeevan J. Neeralagi accepts notice for the respondents. The petitioner has assailed the order passed by the Commissioner (Appeals) in OIA No.MYS-EXCUS- 000-APPELLANT-062-18-19 dated 17.09.2018, as well as the order of the Assistant Commissioner of Central Tax in OIO No.MYS-EXCUS-000-BNMTPDIV AC JS 10 -2017-18/520 dated 3011.2017/11.12.2017. 2. The petitioner is a Partnership Firm which has undertaken the activity of renting of buildings for commercial purpose. The petitioner is registered with the service tax department under the category of "Renting of Immovable Property Service". The petitioner firm has leased out their premises to M/s. Royal Hotel, Thrissur for a term of eight years with a monthly rent of Rs.45,000/- upto 48 months and thereafter at Rs.48,750/- up to 96th months. The lessee as per the agreement has deposited security deposit of Rs.3 crores and the same was received by the petitioner on different dates during the years 2010 and 2011, the last date being 28.03.2011. However, the agreement between the lessee and the petitioner has been executed on 09.06.2011. 3. The petitioner was served with a show-cause notice, wherein it is averred that during the investigation conducted by the service tax department, it was found that the petitioner is carrying on the activities of renting/leasing of buildings and is liable to pay service tax as the said activity is coming under the taxable service of "Renting of immovable property" upto 30.06.2012 and under "taxable service" from 01.07.2012 onwards. The Adjudicating Authority passed the order on 30.11.2017/11.12.2017 and it was served on the petitioner on 21.01.2018 against which the petitioner had preferred an appeal before the Appellate Authority on 25.05.2018. 4. The Commissioner (Appeals) rejected the appeal preferred by the petitioner as barred by limitation, beyond the condonable period of 30 days. 5. Learned counsel for the petitioner assessee would submit that since the original order was served on the petitioner company on 21.01.2018, the petitioner could not file the appeal well within time i.e., 20.04.2018 since he had met with an accident during that period. However, in view of the statutory limitation contained in the first proviso to Section 35(1) of the Finance Act, 1994 ('Act' for short), the respondent Commissioner (Appeals) could not exercise any discretion in the matter (since the appeal was filed on 25.05.2018) beyond thirty days. However, in view of the statutory limitation contained in the first proviso to Section 35(1) of the Finance Act, 1994 ('Act' for short), the respondent Commissioner (Appeals) could not exercise any discretion in the matter (since the appeal was filed on 25.05.2018) beyond thirty days. The learned counsel submitted that the impugned adjudication order suffers from arbitrariness and illegality; the determination of point of taxation for the purpose of the Point of Taxation Rules, 2011 is, where person providing the service receives a payment before the time specified i.e., the time when the invoice for the service provided or to be provided is issued. This aspect has not been properly appreciated by the adjudicating authority. The Appellate Authority being bound by the provisions of the Act, dismissed the appeal observing that the appeal is filed with the delay of 124 days beyond the condonable power vested with the authority. 6. The learned counsel relied upon the Division Bench ruling of this Court in the case of Phoenix Plasts Co. vs. Commissioner. of C. Ex. (Appeal I), Bangalore, (2013) 298 ELT 481 (Kar.), wherein this Court has held as under:- "13. In our considered view, as observed by us hereinabove, the absence of the case of the appellant by the first appellate authority has resulted in a failure of justice or gross miscarriage of justice, as per the view taken by the Full Bench of High Court of Gujarat in case of Panoli Intermediate (India) (P) Ltd., (supra). Hence, the petition under Article 226 of the Constitution could be maintained and it was a fit case to exercise power under Article 226 of the Constitution to interfere with the order of the first appellate authority and the interference not being made, has resulted in failure of justice. But at the same time, even if it becomes a case for exercise of the power under Article 226 of the Constitution, the Court may ensure that no litigant or the assessee takes any undue benefit of the power under Article 226 of the Constitution. If the case is considered infavour of invoking the appellate power, the requisite condition would be to deposit 7.5% of the duty demanded. Further, it cannot be said that the appellant was vigilant about its right to pursue the matter in time and there is delay also in filing this appeal. If the case is considered infavour of invoking the appellate power, the requisite condition would be to deposit 7.5% of the duty demanded. Further, it cannot be said that the appellant was vigilant about its right to pursue the matter in time and there is delay also in filing this appeal. If the appellant has not pursued the remedy well in time, though we may keep in mind the real merits of the matter, the appellant cannot get away from paying appropriate cost, by way of compensation, by the delay caused in pursuing the litigation up to this Court. Hence, we find that even if the order of the first appellate authority is to be interfered with it, it should be on a condition that the appellant deposits 7.5% of the demand of duty, plus pay the cost of Rs.25,000/- to the respondent." 7. Reliance is also placed on the rulings of the High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh in the case of Electronics Corporation of India Ltd., vs. Union of India, (2018) 361 ELT 22 (A.P.). 8. Learned counsel for the petitioner further submitted that the pre-deposit conditions have been complied with by the petitioner. 9. In view of the aforesaid, this Court is of the considered view that the reasons assigned by the petitioner in condoning the delay of 64 days calculated as 124 days by the Appellate Authority has to be construed as the sufficient cause shown and deserves to be condoned. However, in view of the statutory limitation on the powers, the Appellate Authority has declined to condone the said delay. There is no prohibition for this Court under Articles 226 and 227 of the Constitution in exercising the extraordinary jurisdiction to condone the said delay of 64 days accepting the satisfactory explanation offered by the petitioner in view of the merits found in the appeal preferred by the Assessee subject to costs of Rs.10,000/- which otherwise would result in failure of justice. 10. 10. Accordingly, the delay in preferring the appeal is condoned and the appeal is restored to the file of the respondent Commissioner (Appeals) with a direction to decide the appeal on merits in accordance with law in an expedite manner, in any event, not later than three months from the date of receipt of certified copy of the order subject to compliance of pre-deposit and cost of Rs.10,000/- to be deposited with the respondent Commissioner (Appeals). All the rights and contentions of the parties are left open. The writ petition stands disposed of in terms of the above.