[Cites 4, Cited by 0]
Calcutta High Court
Shree Shyam Steel Co vs Commissioner Of Central Tax on 24 December, 2025
Author: Rajarshi Bharadwaj
Bench: Rajarshi Bharadwaj
2025:CHC-OS:272-DB
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION
ORIGINAL SIDE
CEXA 60 OF 2024
IA NO: GA 2 of 2024
SHREE SHYAM STEEL CO
VS
COMMISSIONER OF CENTRAL TAX, CGST AND CENTRAL EXCISE
BEFORE:
THE HON'BLE JUSTICE RAJARSHI BHARADWAJ
AND
THE HON'BLE JUSTICE UDAY KUMAR
For the Appellant : Mr. N.K. Chowdhury, Adv.
Mr. Nilotpal Chowdhury, Adv.
Mr. Prabir Bera Adv.
For the Respondent : Mr. Vipul Kundalia, Sr. Adv.,
Mr. Anurag Roy, Adv.,
Mr. Dhirodatta Chaudhuri Adv.
Hearing concluded on : 04.12.2025
Judgment on : 24.12.2025
Uday Kumar, J:-
1. This appeal, preferred by the Assessee under the statutory mandate of
Section 35G of the Central Excise Act, 1944, assails the legality of
Interim Order No. 142/2024 (Defect) dated 14.05.2024, passed by the
Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Eastern
Zonal Bench, Kolkata. By the said order, the learned Tribunal refused
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to condone a delay of 2262 days in filing the statutory appeal against
the Order-in-Original, resulting in a summary dismissal of the
Assessee's plea upon the characterization of their inaction as "total
negligence."
2. The timeline of the delay is bifurcated into two distinct phases. The
statutory limitation for filing the appeal expired on 10.04.2018;
however, the appeal was eventually preferred only on 28.03.2024.
The Appellant sought to bridge this hiatus by pleading bona fide
reliance upon the Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019 (SVLDRS). An application under the said Scheme was
filed on 18.12.2019, but the Appellant asserts that they remained
oblivious to its rejection until late 2023.
3. The learned Tribunal dismissed the application on two primary
grounds:
i. The period between the expiry of limitation (April 2018) and
the filing of the SVLDRS application (December 2019)
remained unaccounted for.
ii. The rejection status was available on a public web portal as
of 20.01.2020; hence, the plea of ignorance was deemed
unsustainablein the eyes of the law
4. Mr. N.K. Chowdhury, learned Counsel for the Appellant, assisted by
Mr. Nolotpal Chowdhury and Mr. Prabir Bera, forcefully submitted
that the Tribunal's decision was founded upon an unduly technical
and rigid interpretation. He emphasized that the delay was actuated
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by a bona fide, albeit perhaps misguided, attempt to avail a statutory
amnesty. Pressing the jurisprudential standard set in N.
Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, he urged
that the expression "sufficient cause" must be liberally construed, as
the acceptability of the explanation is the sole criterion, regardless of
the length of the delay.
5. Conversely, Mr. Vipul Kundalia, the learned Senior
Advocate/Authorized Representative for the respondent / Revenue,
assisted by Mr. Anurag Roy and Mr. Dhirodatta Chaudhuri, sought to
defend the impugned order, by stressing the gross negligence evident
in the initial period of delay. He further argued that the failure to
verify the publicly accessible online status for nearly four years
evinced a profound lack of diligence, justifying the finding of "total
negligence" under the rigors of Section 5 of the Limitation Act, 1963.
6. After hearing the learned counsel for the parties and perusing the
materials on record, the Substantial Question of Law that arises for
our consideration is:
"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?"
7. The factual matrix, while involving a staggering delay, is relatively
straightforward. The statutory limitation for filing the appeal before
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the CESTAT expired on 10.04.2018. The appeal was eventually filed
on 28.03.2024. The Appellant's primary explanation for this hiatus is
their participation in the Sabka Vishwas (Legacy Dispute
Resolution) Scheme, 2019 (SVLDRS). The Appellant contends that
having applied for the scheme in December 2019, they were under a
bona fide belief that the dispute would be settled. It was only in late
2023 that they allegedly realized their application had been rejected
on the portal.
8. The learned Tribunal took a stern view, characterizing the conduct of
the Appellant as "total negligence." The Tribunal held that the
Appellant failed to explain the "initial lethargy" between April 2018
and the launch of the SVLDRS in 2019. Furthermore, it was observed
that since the rejection status was available on the public portal, the
Appellant could not plead ignorance.
9. We find ourselves unable to subscribe to the view taken by the learned
Tribunal. It is a well-settled principle of law that the expression
"sufficient cause" under Section 5 of the Limitation Act, 1963,
must receive a liberal construction to advance the cause of justice. As
held by the Hon'ble Supreme Court in Collector, Land Acquisition,
Anantnag v. Katiji (1987) 2 SCC 107, when substantial justice and
technical considerations are pitted against each other, the cause of
substantial justice deserves to be preferred.
10. In matters of taxation, the State should not be seen as a litigant
interested in benefiting from the procedural lapses of its citizens. The
SVLDRS, 2019 was a beneficial, State-sponsored mechanism
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intended to clear the backlog of "legacy" disputes. Even if the
Appellant's application was ultimately found to be ineligible--being a
co-noticee--the act of applying for such a scheme is a clear
manifestation of an intent to resolve the liability. It cannot be termed
as a "dilatory tactic" or mala fide conduct.
11. Regarding the Tribunal's observation on the Appellant's "initial
lethargy," we must emphasize that the law of limitation is not meant
to be an "extinguishing engine" for substantive rights. Once it is
shown that the subsequent delay was rooted in a bona fide pursuit of
a settlement scheme, a slightly broader view must be taken of the
preceding period.
12. Furthermore, we cannot ignore the global disruption caused by the
COVID-19 pandemic. The Hon'ble Supreme Court, in its Suo Motu
Writ Petition (C) No. 3 of 2020, took cognizance of the hardships
faced by litigants and directed the exclusion of the period from
15.03.2020 to 28.02.2022 for the purposes of limitation. The
Tribunal's expectation that the Appellant should have monitored the
digital portal daily during this period is, in our considered view,
divorced from the ground realities of the time.
13. The Order-in-Original in the present case imposes a penalty of Rs.
10,23,864/-. To deny a citizen the right to test the legality of such a
penalty on the grounds of a non-deliberate delay would be
unconscionable. Justice should not be a casualty of procedural
rigidity. As observed in N. Balakrishnan v. M. Krishnamurthy
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(1998) 7 SCC 123, the length of the delay is irrelevant; what matters
is the acceptability of the explanation.
14. The Order-in-Original imposes a penalty of Rs. 10,23,864/-. To deny
a citizen the right to test the legality of such a penalty on the grounds
of a non-deliberate delay would be unconscionable. Law is not meant
to be an extinguish any substantive rights.
15. While we are inclined to condone the delay, we are also mindful of the
fact that the Revenue has been put to inconvenience due to the
prolonged duration of this litigation. Therefore, the condonation must
be balanced with the imposition of costs.
16. For the reasons stated above, the appeal is allowed and the following
directions are issued:
i. The Interim Order dated 14.05.2024 is set aside.
ii. The delay of 2262 days in filing the appeal before the CESTAT is
condoned, subject to the Appellant paying a cost of Rs.
10,000/- (Rupees Ten Thousand only) to the
Respondent/Revenue within four weeks from the date of receipt
of this order.
iii. Upon production of proof of payment, the learned Tribunal is
directed to restore the appeal to its original number and decide
the matter on its merits, after affording both parties a fair
opportunity of being heard.
17. The Substantial Question of Law is therefore, answered in favour of
the Appellant. There are no further orders as to costs.
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18. The appeal is disposed of on the aforementioned terms.
19. Urgent photostat certified copy of this judgment, if applied for, be
delivered to the parties upon compliance with all legal formalities.
(RAJARSHI BHARADWAJ, J.) (UDAY KUMAR, J.)
