Case Law Details
Dr. Bharat Chandra Bhuyan Vs Commissioner (Appeals) (Orissa High Court)
The Orissa High Court allowed the writ petition challenging the order of the Commissioner (Appeals), Bhubaneswar, which had refused to condone the delay in filing an appeal under Section 85 of the Finance Act, 1994. The Court held that the Appellate Authority had incorrectly computed the limitation period by treating the date of receipt of the Order-in-Original as the starting point, contrary to the statutory provisions governing limitation. The matter was remitted to the Appellate Authority for fresh consideration of the application for condonation of delay.
The petitioner challenged the Order-in-Appeal dated 23 December 2024 arising from an Order-in-Original dated 9 April 2024 passed under Section 73 of the Finance Act, 1994 for the financial year 2015-16. The Order-in-Original was served on the petitioner on 12 April 2024. The petitioner filed an appeal on 12 July 2024 and contended that the appeal fell within the condonable period prescribed under the proviso to Section 85(3A) of the Finance Act, 1994. The petitioner argued that the Appellate Authority had failed to properly exercise its statutory discretion by incorrectly calculating the limitation period and had also not afforded an opportunity to explain the delay.
The Revenue contended that the appeal had been filed beyond the total period of three months comprising the initial two-month limitation period and the additional one-month condonable period. It argued that the Commissioner (Appeals) lacked jurisdiction to entertain the appeal after expiry of the statutory period and that granting an opportunity of hearing would have served no purpose.
The High Court examined Section 85(3A) of the Finance Act, Section 12 of the Limitation Act, 1963, and Sections 3(35) and 9 of the General Clauses Act, 1897. It held that, in computing limitation, the date on which the Order-in-Original was received must be excluded in accordance with Section 12 of the Limitation Act. Since the order was served on 12 April 2024, the limitation period commenced on 13 April 2024. Accordingly, the prescribed two-month period expired on 12 June 2024, and the further one-month condonable period expired on 12 July 2024. As the appeal was filed on 12 July 2024, it was presented within the condonable period.
The Court relied upon the Supreme Court decisions in State of West Bengal v. Rajpath Contractors & Engineers Ltd., Rameshchandra Ambalal Joshi v. State of Gujarat, and other judgments explaining that the expression “month” refers to a calendar month and that the first day from which limitation is reckoned must be excluded. It observed that the Appellate Authority had failed to apply these statutory provisions and binding precedents while computing limitation.
The High Court found that the Commissioner (Appeals) had wrongly treated the date of receipt of the Order-in-Original as the commencement of limitation, resulting in an erroneous conclusion that the appeal had been filed beyond the condonable period. It held that the Appellate Authority possessed the statutory discretion under the proviso to Section 85(3A) to consider condonation of delay but failed to exercise that discretion because of an incorrect understanding of the limitation provisions.
Accordingly, the High Court set aside the Order-in-Appeal dated 23 December 2024 and remitted the matter to the Commissioner (Appeals) to reconsider the issue of limitation and exercise the discretion conferred under Section 85(3A) of the Finance Act, 1994 afresh. The Court clarified that it had not expressed any opinion on the merits of the service tax demand or the appeal itself and that its observations were confined solely to the computation of limitation and the condonable period. The writ petition was disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
Assailing Order dated 23.12.2024 of the Commissioner (Appeals), Bhubaneswar refusing to exercise the power under Section 85 of the Finance Act, 1994 by condoning delay in presenting the Appeal No.54/ST/RKL-GST/2023, the Petitioner has approached this Court by way of filing this writ petition craving to invoke extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India.
2. Mr. Saswat Kumar Acharya, learned counsel appearing for the Petitioner submitted that the aforesaid appeal under Section 85 of the Finance Act, 1994 was directed against Order-in-Original dated 09.04.2024 passed under Section 73 of the said Act for the financial year 2015-16 raising demand comprising of service tax and penalty. The said order dated 09.04.2024 was served on the Petitioner on 12.04.2024.
2.1. Relying on provisions of sub-section (3A) of Section 85 of the Finance Act, 1994, he submitted that the appeal was required to be “presented within two months from the date of receipt of the decision or order of such adjudicating authority”. Therefore, the Appellate Authority is empowered under proviso to sub-section (3A) ibid. to condone the delay in presenting the appeal within a further period of one month. Thus, in toto a period of three months is available for the petitioner to show sufficient cause for the purpose of maintaining the appeal under Section 85 of the Finance Act. The Petitioner having filed the appeal on 12.07.2024, the Appellate Authority should have exercised the power under proviso to sub-section (3A) of Section 85 of the Finance Act, 1994.
2.2. He strenuously urged that since the Appellate Authority has not applied his conscientious discretion as conferred on him under the statute misdirected himself in computation of period of limitation erroneously and improper application of mind failed to calculate the condonable period of limitation envisaged under proviso to sub-section (3A) of Section 85. The Appellate order is liable to be set aside for fresh adjudication.
2.3. Mr. Saswat Acharya, learned counsel vehemently contended that had the appellate authority afforded an opportunity of hearing on such condonation of delay he would have explained with sufficient reason vis-à-vis statutory provisions.
3. Mr. Sujan Kumar Roy Choudhury, learned Senior Standing Counsel appearing for the COST, CX and Customs Department submitted that no infirmity can be imputed against the appellate order. No indulgence need be shown to the Petitioner. There is no dispute, as it emanate from the appellate order, that Order-in-Original was served on the Petitioner on 12.04.2024 and the appeal was filed on 12.07.2024. Since the total period covered including condonable period is three months (two months + one month), the appeal being presented beyond the condonable period, the Appellate Authority is justified in rejecting the appeal being barred by limitation thereby he upheld the assessment order under Section 73 of the Finance Act.
3.1. Mr. Sujan Kumar Roy Choudhury, learned Senior Standing Counsel would submit that grant of opportunity would be futile exercise inasmuch as fact of presentation of appeal beyond three months (including the condonable period) is apparent from the record. Granting further opportunity would protract the appeal. Since the Appellate Authority ceases to have power under Section 85 of the Finance Act, 1994 after three months from the date of receipt of Order-in-Original passed under Section 73 of the said Act, there is no scope for him to issue notice inviting explanation.
3.2. Therefore, he insisted for dismissal of the writ petition.
4. Having heard learned counsel for respective parties, this Court considered the material available on record. On perusal of order dated 23.12.2024 passed in appeal, it surfaced that the Order-in-Original dated 09.04.2024 was served on the Petitioner on 12.04.2024. Thus, the period of limitation is to be reckoned from the next date, i.e., 13.04.2024.
4.1. The last date for presenting the appeal within the specified period of two months from this date (13.04.2024) would fall on 12.06.2024 and the condonable period of one month would lapse on 12.07.2024. Concededly by counsel both the parties, the appeal was presented on 12.07.2024. It is, therefore, abundantly clear that the Appellate Authority has misguided himself and his approach in computation of period of limitation is tainted. The Appellate Order dated 23.12.2024 is faulted with in view of Section 85(3A) of the Finance Act, 1994 read with Section 12 of the Limitation Act, 1963 and Section 9 read with Section 3(35) of the General Clauses Act, 1897.
4.2. The relevant provisions may be referred to, to have better comprehension of computation of period of limitation contained in Section 85 of the Finance Act, 1994:
(i) Section 85(3A) of the Finance Act:
“An appeal shall be presented within two months from the date of receipt of the decision or order of such adjudicating authority, made on and after the Finance Bill, 2012 receives the assent of the President, relating to service tax, interest or penalty under this Chapter:
Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month.”
(ii) Section 12 of the Limitation Act, 1963:
“12. Exclusion of time in legal proceedings.—
1. In computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded.
2. In computing the period of limitation for an appeal or an application for leave to appeal or for revision or for review of a judgment, the day on which the judgment complained of was pronounced and the time requisite for obtaining a copy of the decree, sentence or order appealed from or sought to be revised or reviewed shall be excluded.
3. Where a decree or order is appealed from or sought to be revised or reviewed, or where an application is made for leave to appeal from a decree or order, the time requisite for obtaining a copy of the judgment shall also be excluded.
4. In computing the period of limitation for an application to set aside an award, the time requisite for obtaining a copy of the award shall be excluded.
Explanation.—
In computing under this section the time requisite for obtaining a copy of a decree or an order, any time taken by the Court to prepare the decree or order before an application for a copy thereof is made shall not be excluded.”
(iii) Sections 3 and 9 of the General Clauses Act, 1897: “3. Definitions.—
In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,—
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(35) “month” shall mean a month reckoned according to the British calendar;
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9. Commencement and termination of time.—
(1) In any Central Act or Regulation made after the commencement of this Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word “from”, and, for the purpose of including the last in a series of days or any other period of time, to use the word “to”.”
4.3. Having diligently considered the submissions and counter arguments of the learned counsel for the respective parties vis-à-vis aforesaid provisions of different statutes, this Court in order to have perspective of computation of limitation takes aid of State of W.B. Vrs. Rajpath Contractors & Engineers Ltd., (2024) 7 SCC 257, wherein it has been held:
“8. As per Section 12(1) of the Limitation Act, the day from which the limitation period is to be reckoned must be excluded. In this case, the period of limitation for filing a petition under Section 34 will have to be reckoned from 30.06.2022, when the appellants received the award. In view of Section 12(1) of the Limitation Act, 30.06.2022 will have to be excluded while computing the limitation period. Thus, in effect, the period of limitation, in the facts of the case, started running on 01.07.2022. The period of limitation is of three months and not ninety days. Therefore, from the starting point of 01.07.2022, the last day of the period of three months would be 30.09.2022. As noted earlier, the pooja vacation started on 01.10.2022.”
4.4. It is apposite to refer to the principle of calculation of period of limitation as suggested in the judgment of the Hon’ble Supreme Court in the case of Rameshchandra Ambalal Joshi vs. State of Gujurat and another, (2014) 11 SCC 759, wherein it has been observed as follows:
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12. The first question which calls for our answer is the meaning of the expression “month” : whether it would mean only a period of 30 days and, consequently, whether six months would mean a period of 180 days. The word “month” has been defined under Section 3(35) of the General Clauses Act to mean a month reckoned according to the British calendar. Therefore we cannot ignore or eschew the word “British calendar” while construing “month” under the Act. Accordingly, we are of the opinion that the period of six months cannot be calculated on 30 days in a month basis. Therefore, both the modes of calculation suggested by Mr Ahmadi do not deserve acceptance and are rejected accordingly.
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19. This decision in Haru Das Gupta Vrs. State of W.B., (1972) 1 SCC 639 was quoted with approval in Saketh India Ltd. Vrs. India Securities Ltd., (1999) 3 SCC 1 in the following words:
„7. The aforesaid principle of excluding the day from which the period is to be reckoned is incorporated in Sections 12(1) and (2) of the Limitation Act, 1963. Section 12(1) specifically provides that in computing the period of limitation for any suit, appeal or application, the day from which such period is to be reckoned, shall be excluded. Similar provision is made in sub-section (2) for appeal, revision or review. The same principle is also incorporated in Section 9 of the General Clauses Act, 1897 which, inter alia, provides that in any Central Act made after the commencement of the General Clauses Act, it shall be sufficient, for the purpose of excluding the first in a series of days or any other period of time, to use the word „from‟ and for the purpose of including the last in a series of days or any other period of time, to use the word „to‟.
8. Hence, there is no reason for not adopting the rule enunciated in the aforesaid case which is consistently followed and which is adopted in the General Clauses Act and the Limitation Act.‟
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21. At this stage, we would also like to refer to Halsbury‟s Laws of England, Vol. 37, 3rd Edn., Para 143 at p. 83 which provides for calculation of a calendar month:
„143. Calendar month running from arbitrary date.—
When the period prescribed is a calendar month running from any arbitrary date the period expires with the day in the succeeding month immediately preceding the day corresponding to the date upon which the period starts; save that, if the period starts at the end of a calendar month which contains more days than the next succeeding month, the period expires at the end of the latter month.‟
22. Drawing a conclusion from the abovementioned authorities, we are of the opinion that the use of word “from” in Section 138(a) requires exclusion of the first day on which the cheque was drawn and inclusion of the last day within which such act needs to be done. In other words, six months would expire one day prior to the date in the corresponding month and in case no such day falls, the last day of the immediate previous month. Hence, for all purposes, the date on which the cheque was drawn i.e. 31.12.2005 will be excluded and the period of six months will be reckoned from the next day i.e. from 01.01.2006; meaning thereby that according to the British calendar, the period of six months will expire at the end of the 30th day of June, 2006. Since the cheque was presented on 30.06.2006, we are of the view that it was presented within the period prescribed.”
4.5. Taking note of very many decisions, in M/s. Brand Protection Services Private Limited Company Vrs. State of Bihar and others, 2025 SCC OnLine Pat 772 reference has been made to State of H.P. Vrs. Himachal Techno Engineers, (2010) 12 SCC 210 and the Patna High Court held,
“24. In yet another case of Himachal Techno Engineers (supra), the same question fell for consideration in relation to Section 34(3) and its proviso under the Arbitration and Conciliation Act, 1996. Paragraph ‘14‘, ‘15‘ and ‘16‘ of the judgment in case of Himachal Techno Engineers (supra) are being reproduced hereunder for a ready reference:
„14. The High Court has held that “three months” mentioned in Section 34(3) of the Act refers to a period of 90 days. This is erroneous. A “month” does not refer to a period of thirty days, but refers to the actual period of a calendar month. If the month is April, June, September or November, the period of the month will be thirty days. If the month is January, March, May, July, August, October or December, the period of the month will be thirty-one days. If the month is February, the period will be twentynine days or twenty-eight days depending upon whether it is a leap year or not.
15. Sub-section (3) of Section 34 of the Act and the proviso thereto significantly, do not express the periods of time mentioned therein in the same units. Sub-section (3) uses the words “three months” while prescribing the period of limitation and the proviso uses the words “thirty days” while referring to the outside limit of condonable delay. The legislature had the choice of describing the periods of time in the same units, that is, to describe the periods as “three months” and “one month” respectively or by describing the periods as “ninety days” and “thirty days” respectively. It did not do so. Therefore, the legislature did not intend that the period of three months used in sub-section (3) to be equated to 90 days, nor intended that the period of thirty days to be taken as one month.”
4.6. The conspectus of legal position with respect to computation of limitation upon reckoning the date of commencement/starting point of limitation leaves no iota of doubt in mind that in the instant case, the period of limitation commences from 13.04.2024 as the order under challenge in the appeal was served on the Petitioner on 12.04.2024.
4.7. The expression “two months from the date of receipt of the decision or order” read along with the provisions contained in Section 9 of the General Clauses Act, 1897, makes it crystal clear that the first date of receipt of order shall be excluded and the date of limitation would commence from the next date, i.e., 13.04.2024. This Court, therefore, hold that the next day of receipt of Order-in-Original, subject-matter of appeal, shall be construed to be the commencement date of limitation for the purpose of Section 85(3A) of the Finance Act, 1994.
4.8. To fortify such view, provisions of Section 12 of the Limitation Act, 1963, read with the interpretation set forth in decisions referred to supra unequivocally manifest that the delay in presenting the appeal under Section 85(3A) of the Finance Act, 1994 could be condoned for a further period of one month, if the same is presented beyond the period of two months reckoned on and from 13.07.2024.
4.9. Examining the appellate order dated 23.12.2024 juxtaposed with the aforesaid conspectus of factual matrix coupled with the statutory provisions and interpretation set forth by Courts, this Court is left with no other option but to set aside the same. It is apparent from the perusal of appellate order that while calculating the Appellate Authority having taken the date of receipt of Order-in-Original by the petitioner as the starting point of limitation, he fell in error warranting intervention of this Court in exercise of writ jurisdiction.
4.10. As it transpires from the impugned order, the Appellate Authority has not borne in mind the purport of Section 3(35) read with sub-section (9) of the General Clause Act, 1897, Section 12 of the Limitation Act, 1963, and the ratio of decisions referred to supra. Therefore, the conclusion arrived at by the Appellate Authority vide Order dated 23.12.2024 is faulted with.
4.11. The view expressed by the Appellate Authority in his order that appeal was presented beyond the period of one month after the expiry of period of two months in terms of Section 85(3A) of the Finance Act, 1994 is indefensible.
4.12. The Appellate Authority being competent to apply his discretion to condone the delay in terms of proviso to sub-section (3A) of Section 85 of the Finance Act, 1994, failed to appropriately treat the date of reckoning of commencement of limitation.
4.13. As contended by Mr. Saswat Kumar Acharya, learned Advocate, had the Appellate Authority granted one opportunity to explain, he would have presented the fact and the law on the subject and would have convinced that the period of limitation as envisaged under Section 85 of the Finance Act, 1994 would commence on and from 13.07.2024 instead of 12.07.2024, i.e., the date of which the Petitioner was served with the Order-in-Original.
4.14. Having thus demonstrated the legal aspect of calculation of period of limitation as envisaged under Section 85(3A) of the Finance Act, 1994, this Court is inclined to interfere with the Order dated 23.12.2024 passed by the Commissioner (Appeals), Bhubaneswar and, having held that the Commissioner (Appeals) has the competence to deal with the proviso to sub-section (3A) of Section 85 of the Finance Act, 1994, on the facts and in the circumstances of the case, the said order is liable to be set aside.
5. Ergo, the Order-in-Appeal dated 23.12.2024 passed by the Commissioner (Appeals), Bhubaneswar is set aside and the matter is remitted to the Appellate Authority to exercise his conscientious discretion as conferred under Section 85(3A) of the Finance Act, 1994 and adjudicate the matter with respect to limitation afresh.
5.1. Needless to observe that this Court has not expressed any opinion on the merits of the matter. The facts and circumstances narrated hereinabove are for the purpose of adjudicating the issue with regard to reckoning of period of limitation for the purpose of consideration of condonable period as provided under the proviso to subsection (3A) of Section 85 of the Finance Act, 1994.
6. With the aforesaid observation and directions, the writ petition stands disposed of and a result thereof, all pending Interlocutory Applications, if any, shall stand disposed of.
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