Atul Singh Garhi vs Commissioner Cgst

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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR

BEFORE
HON'BLE SHRI JUSTICE ALPESH Y. KOGJE,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VIVEK JAIN
th
ON THE 28 OF OCTOBER, 2026
CENTRAL EXCISE APPEAL No. 20 of 2026
CNR No.: MPHC010703612026
ATUL SINGH GARHI
Versus
COMMISSIONER CGST
Appearance:
Shri Sapan Usrethe - Advocate for the appellant.
Shri Abhijeet Shrivastava - Advocate (through V.C.) for the
respondent.
ORDER
Per: Hon'ble Shri Justice Alpesh Y. Kogje, Chief Justice
The present appeal is filed praying inter alia for setting aside the final
order dated 02.04.2026 in Service Tax Appeal No.51357 of 2019 passed by
the Customs, Excise and Service Tax Appellate Tribunal, New Delhi
(CESTAT) which has confirmed the Order-in-Appeal dated 26.02.2019
passed by the Commissioner (Appeals) of CGST, Customs and Central
Excise, Bhopal in Appeal No.1036-ST/2018.
2. This appeal raises substantial questions of law enumerated in the
memo of appeal, which are as under:-
"(A) Whether the dismissal of an appeal after a seven year delay by the
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learned CESTAT is sustainable in law when the impugned order of the
Commissioner (Appeals) itself suffers from a fatal defect of non-
compliance with the principles of natural justice owing to a lack of
proper hearing ?

(B) Whether the learned CESTAT erred in law by dismissing
the appeal as time-barred based on an incorrect date of service
i.e. 22.09.2018, thereby ignoring the fact that the order was received on
07.10.2018, making the delay only 17 days, and further misinterpreting
Section 85 of the Finance Act, 1994, to hold that the Commissioner
(Appeals) lacked the power to condone such a delay?

(C) Whether the learned CESTAT erred in dismissing the appeal for
delay by failing to apply the principle laid down by the Hon’ble
Bombay High Court in Skoda Auto Volkswagen India Pvt. Ltd. Vs.
Commissioner (Appeals) - which holds that where the original order is
served on a Saturday (22.09.2018), the appeal filed on the next
working day (24.12.2018) is deemed within the extended limitation
period; thereby erroneously denying the Commissioner (Appeals)
jurisdiction to condone the delay under Section 85 of the Finance Act,
1994?"

3. Essentially the case of the appellant is that the dismissal of his
appeal is on the ground of delay where both the authorities and the Tribunal
have concluded that the delay is of 17 days beyond the condonable period.
4. The facts in brief are that the appellant is in the business of
construction and providing construction service which is a taxable service
and is having service tax registration No.AJKPS8157RST001 and on the
basis of income tax form 26AS, the service tax department noticed the
appellant stating that the appellant has received a huge amount towards the
service rendered by him and yet not paid any service tax and not filed ST-3
returns between the period April, 2012 to March, 2017. Accordingly, a show
cause notice dated 21.11.2017 was issued proposing demand of service tax to
the tune of Rs.70,01,478/- not paid by the appellant on the taxable value of
Rs.5,34,15,225/- received between the period April, 2012 to March, 2017,
thereby, proposing the imposition of applicable interest under section 75 of
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Chapter V of Finance Act, 1994 and penalties under sections 77(2) and 77(1)

(c) of the Finance Act, 1994 and a penalty of Rs.70,01,478/- under section
78 of the Finance Act, 1994.
5. The appellant did submit his reply to the show cause notice which
is dated 21.04.2018 which ultimately came to be adjudicated under Order-in-
Original dated 28.08.2018 confirming the demand as per the show cause
notice. This OIO was dated 28.08.2018 and according to the appellant, the
said OIO was delivered on 22.09.2018. It was received by the neighbour one
Mansukh Lal Namdeo and ultimately reached the residence of the appellant
on 07.10.2018. The appellant had filed an appeal against the OIO before the
Appellate Tribunal on 24.12.2018, which according to the appellant was not
delayed. However, the appeal came to be rejected on the ground that the
appeal filed on 24.12.2018 was delayed by 17 days treating the service of the
order of appeal on 22.09.2018.
6. Learned counsel for the appellant has submitted that the learned
Tribunal erred in passing the impugned order without appreciating that the
Commissioner (Appeals) had dismissed the appellant’s appeal on the ground
of delay without issuing notice or affording an opportunity of hearing,
thereby violating the principles of natural justice. It was further contended
that both appellate authorities failed to consider the appellant’s plea that the
construction work contracts executed for government departments were
exempt from service tax. The appellant had placed copies of sample work
orders and Form 26AS at Annexure A-8 on record before the CESTAT;
however, the Tribunal dismissed the appeal without examining its merits,
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after a lapse of more than seven years from the date of its filing. Learned

counsel for the appellant further submitted that the Tribunal erred in
upholding the order of the Commissioner (Appeals), which was allegedly
passed on an incorrect factual premise and without affording the appellant an
opportunity of hearing. It was also contended that the Tribunal wrongly
proceeded on the basis that the order-in-original had been served on
22.09.2018, making the appeal due by 21.11.2018, whereas the appellant
asserted that the order was received only on 07.10.2018 and that the appeal,
filed on 24.12.2018, was delayed by only 17 days beyond the prescribed
period. The appellant contended that such delay was condonable under
Section 85 of the Finance Act, 1994. He further contended that the Tribunal
has failed to appreciate the affidavits of the appellant and one Mansukh Lal
Namdeo in support of the actual date of receipt of the order at Annexure A-9.
7. On behalf of the Department, learned counsel opposed the
appellant’s submissions, contending that the acknowledgment of service
clearly established that the order had been delivered at the appellant’s
address on 22.09.2018. Accordingly, the appellant’s claim of having received
the order on 07.10.2018 was disputed. Learned counsel further pointed out
an inconsistency in paragraphs 9.1 and 9.2 of the grounds of appeal at
Annexure A/7, wherein paragraph 9.1 mentioned that the appellant was
unavailable at his address from 15.09.2018 to 04.10.2018, whereas paragraph
9.2 asserted that the appellant had met with an accident on 15.09.2018 and
remained hospitalized until 07.10.2018. On these grounds, learned counsel
for the Department prayed for dismissal of the appeal. It is, therefore,
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submitted that according to the department, there is a delay of more than 90

days and the Commissioner (Appeals) has no statutory power to condone the
delay even of one day beyond period of 30 days which is condonable above
the 60 days provided for preferring the appeal under the statute.
8. The CESTAT has assigned the reasons that under Section 85 of the
Finance Act, 1994, an appeal before the Commissioner (Appeals) must be
filed within two months from the date of receipt of the order under challenge.
The Commissioner (Appeals) is empowered to condone a further delay of
upto 30 days beyond the prescribed limitation period. However, in the
present case, the delay exceeded the permissible period of condonation,
extending beyond 90 days from the date of receipt of the order. Accordingly,
the CESTAT held that the Commissioner (Appeals) had no statutory power
to condone any delay beyond the additional period of 30 days. The Tribunal
further observed that the appellant had failed to furnish a sufficient
explanation for the delay before the Commissioner (Appeals).
9. The substantial questions of law raised in this appeal, particularly
questions No.(A) and (B) pertain to the non-compliance of principles of
natural justice and non-application of section 85 of the Finance Act 1994 to
hold that the Commissioner (Appeals) lacks the power to condone the delay
without examining the fact that the appeal was preferred within the
condonable period of limitation. The Court may therefore advert to the facts
as recorded by the Tribunal which has observed after perusing the case
record that the order in original is dated 28.08.2018 and was delivered at the
address of the appellant on 22.09.2018, albeit the contention of the appellant
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is that the delivery of the OIO was on 07.10.2018. Even if the Court takes

the date of delivery as per the department's record then according to the
Tribunal the appeal should have been filed before the Commissioner
(Appeals) on or before 21.11.2018 but the appeal was filed on 24.12.2018.
10. The Court has taken into consideration the submissions made by
the counsel for the appellant by drawing our attention to the calendar of the
year 2018 wherein it is indicated that 22.09.2018 was a Saturday and
thereafter followed by 23.09.2018 to be Sunday, thereby those days would
necessarily will have to be excluded and even if 22.09.2018 is the date of
service, then expiry of period of limitation would be on 22.11.2018 and the
condonable period of 30 days would commence on 23.11.2018 to
23.12.2018, which again was a Sunday and therefore when the appeal came
to be filed on 24.12.2018, it was still within the condonable period.
11. The perusal of the order of the Commissioner (Appeals) dated
26.02.2019 would indicate that the Commissioner (Appeals) refused to
exercise the powers under Section 85(3A) of the Finance Act, 1994 by
concluding on fact that the delay in filing the appeal is one month and two
days, thereby treating the period of two days beyond the period of 30 days of
condonable period, has refused to exercise the powers under Section 85(3A)
holding that the Commissioner (Appeals) has no power to do so.
12. Section 85(3A) of the Finance Act, 1994 as amended would read
as under:-

"Section 85:
*
(3A) An appeal shall be presented within two months from the date of
receipt of the decision or order of such adjudicating authority, made on
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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.
*"


13. The proviso to Section 85(3A) specifically provides that the
Commissioner of Central Excise Appeal if satisfied by the sufficient cause
for filing the appeal after a period of two months may allow the appeal to be
presented within further period of one month. It appears that an error of law
is committed in applying the proper provision to the facts of the case,
wherein as indicated in the preceding para, considering the dates chronology,
an erroneous conclusion is arrived at that the appeal is filed with a delay of
one month and two days whereas according to this Court the appeal was filed
within the condonable period under section 85(3A).
14. The perusal of the facts of the case would also indicate that there
was no occasion for the appellant to set up his case for explaining the delay
as pursuant to the filing of the appeal, the Commissioner (Appeals) has
proceeded to decide the appeal and therefore, answering the substantial
question of law No.(A) in favour of the appellant, the Court holds that the
Commissioner (Appeals) has failed to abide by the principles of natural
justice in proceeding to decide the appeal as is evident in the concluding para
No.9 holding that the appeal filed by the appellant is to be dismissed at the
threshold stage and on facts that no opportunity was given to the appellant to
explain the delay.
15. The question No.(B) is also answered in favour of the appellant as
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the Commissioner (Appeals) has misinterpreted Section 85(3A) of the

Finance Act to hold that the Commissioner (Appeals) lacked the power to
condone the delay as Section 85(3A) provides for the power to the
Commissioner to condone the delay upto 30 days, if the same is explained to
the satisfaction of the Commissioner (Appeals).
16. Therefore, it was incumbent upon the Commissioner (Appeals) to
call upon the appellant in the facts of the present case to explain the reasons
preventing the appellant from preferring the appeal within the stipulated
period or within the condonable period of 30 days as on facts, this Court has
proceeded to hold that the appeal filed on 24.12.2018 was preferred within
the period of 30 days, that is, the condonable period as per Section 85(3A) of
the Finance Act, 1994.
17. The appeal therefore stands allowed. The final order dated
02.04.2026 in Service Tax Appeal No.51357 of 2019 passed by the
CESTAT, New Delhi confirming the Order-in-Appeal dated 26.02.2019
passed by the Commissioner (Appeals) of CGST, Customs and Central
Excise, Bhopal in Appeal No.1036-ST/2018 is set aside.
18. As a fallout of the aforesaid, the department is to consider the
appeal by affording the appellant an opportunity to explain the delay to file
the appeal within the condonable period.
(ALPESH Y. KOGJE)
(VIVEK JAIN)
CHIEF JUSTICE
JUDGE
C

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