The Hon’ble High Court of Karnataka vide its order dated 08.09.2022 in the matter of M/s Himalaya Drug Company Vs. Commissioner of Central Tax (Appeals – II), Additional Commissioner of Central Tax, Central Excise and Service Tax, GST Commissionerate, Bengluru in Writ Petition No. 10142 of 2021, Condoned the delay beyond the statutory limit prescribed on sufficient cause being shown, where the Appellate Authority does not have the power to do so.

The Petitioner filed the petition before the Hon’ble High Court seeking quashing of order in appeal dated 02.03.2021 passed by Respondent No.1 (Appellate Authority), whereby the order dated 28.02.2019 was confirmed by the Appellate Authority.

Facts of the Case: –

• That the proceeding was initiated against the petitioner was contested and thereafter, the impugned order in original dated 28.02.2019 was passed by Respondent No.2, which was received by the petitioner on 13.03.2019.
• Aggrieved of the said order, the petitioner preferred an appeal on 14.11.2019 before the Appellate Authority (Respondent No.1) along with an application for condonation of delay in filing the Appeal.
• That the Appellate Authority by an order dated 02.03.2021, declined to condone the delay in preferring the appeal and dismissed the appeal filed by the petitioner as barred by limitation. Aggrieved by the impugned orders, the petitioner has moved the present petition.

Petitioner’s Submissions: –

• It was submitted on the behalf of the petitioner that the inability and omission on the part of the petitioner to prefer the appeal before the Appellate Authority within the prescribed period was due to bonafide reasons, unavoidable circumstances and sufficient cause as detailed in the application for condonation of delay as well as in the present petition.
• It was contended that though the Appellate Authority does not have power to condone the delay in preferring the appeal, it is always open for this Court to exercise its extra ordinary jurisdiction under Article 226 of the Constitution of India and this Court is empowered to condone the delay in order to do complete and substantial justice, particularly when the petitioner has good case to urge on merits and is ready to abide by the terms and conditions to be imposed by this Court.
• To support its contentions reliance was placed on the decision of Hon’ble Division Bench in W.A.No.942/2021 [Simplex Infrastructures Ltd., And Another V/s. The Joint Commissioner Of Central Tax And Others, D.D. ON 03.12.2021].
• Further it was contended that GST was introduced on 01.07.2017, the extended last date to take input tax credit was 31.03.2019 and accordingly, the petitioner and its officers were over burdened with compliances during the period March-2019 to October-2019, as it has GST registrations in 24 States and she was travelling to many states to complete GST audit.
• The impugned order was received by the inward section, however, due to the travel of the Officer concerned, it was not served to her so as to enable her to prefer appeal withing the stipulated period.  The order in original came in to the knowledge of the aforesaid officer in October-November, 2019, when the clarifications was sought by the respondents with regard to the status of the order.
• Thereafter, Immediately the petitioner took necessary steps to prefer the appeal before respondent No.1-Appellate Authority along with an application seeking condonation of delay.

On the other hand, it was contended on the behalf of the respondents that there is lack of due diligence and negligence on the part of the petitioner in preferring the appeal within the prescribed period and no indulgence can be shown in favour of the petitioner, who has slept over its rights for more than six months.  Therefore, the petition is liable to be dismissed.  Further to support the contentions reliance was placed on the decision of M/s Laxmi Electronic Moulds & Precision Engineering Private Ltd. V/s Union Of India And Others [W.P.No.53511/2018, D.D., ON 23.09.2021].

Held: –

• The Hon’ble Court after considering the submissions made and facts of the case, found that the specific contention of the petitioner in the Condonation of delay application filed before the Appellate Authority as well as in the present petition is that ‘the impugned order in original dated 28.02.2019 passed by respondent No.2 was received by the petitioner only on 13.03.2019 when it was delivered to the inward Section of the petitioner and was not forwarded or handed over to the Senior Manager (Taxation), who was in charge of the case as well as indirect taxes of the petitioner-Company and hence, the petitioner was not aware of the said order.’
• It was found by the Hon’ble Court that aforesaid facts and circumstances, as stated by the Petitioner, clearly establish the petitioner had made out valid and sufficient ground/cause to condone the delay in preferring the appeal before the appellate Authority. It is also clear that the inability and omission on the part of the petitioner to prefer the appeal within the prescribed period was due to bonafide reasons, unavoidable circumstances and sufficient cause.
• Further, it is well settled principle that the Appellate Authority does not have the power to condone the delay beyond the extended/condonable period of 30 days after expiry of initial period of 60 days. However, by adopting justice-oriented approach and in order to do complete and substantial justice, in the peculiar/special facts and circumstances obtaining in the instant case and in the light of the material on record which clearly establishes that the delay in preferring the appeal was wholly unintentional and due to valid and sufficient grounds referred to supra coupled with the fact that the petitioner has a good case to urge on merits and the balance of convenience in its favour.
• The Hon’ble Court referring to the Division Bench judgment relied upon by the Petitioner in case of Simplex Infrastructure’s case supra, found it just and appropriate to exercise powers under Article 226 of the Constitution of India and condoned the delay in preferring the appeal by the Petitioner by setting aside the impugned order and remitted the matter back to Respondent No.1 for reconsideration of the appeal afresh on merits in accordance with law.
• Lastly, the Hon’ble Court referring to the Division Bench judgment relied upon by the respondents in case of Lakshmi Electronics case supra, found that the facts of the said judgment are clearly distinguishable from the facts of the instant case. Therefore, no reliance can be placed on said judgment.

The Hon’ble Court with the above findings, allowed the Writ Petition subject to the petitioner depositing a sum of Rs.10,000/- (Rupees Ten Thousand only) to the Advocates Welfare Fund, Bengaluru.  The impugned order dated 02.03.2021 passed by the Appellate Authority (Respondent No.1) was quashed and the application for condonation of delay in preferring the appeal by the petitioner before respondent No.1 was allowed and the delay in preferring the appeal stands condoned.  The matter was remitted back to the Respondent No.1 for re-consideration afresh in accordance with law, without reference to the issue/question regarding condonation of delay and/or limitation in preferring the appeal which stands concluded in favour of the petitioner by virtue of this order.

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