ST - Govt departments are working with depleted staff strength - Finance & Accounts Manager is crucial post and its vacancy vital element and factor - In such circumstances, by imposition of costs, discretion could have been exercised by Tribunal in favour of statutory entity: High Court
By TIOL News Service
MUMBAI, FEB 19, 2015: MSEDCL is functioning under the Maharashtra State Electricity Board and is a Government of Maharashtra undertaking. Service Tax demand of a total of Rs.2.68 lakhs was confirmed against the appellant on the ground that the activity in respect of 'supervision of the work' was classifiable as "Consulting Engineer Service".
The Commissioner(A) rejected their appeal on 21/07/2011.MSEDCL filed an appeal before the CESTAT with a delay of 579 days and sought condonation of the same.
Their plea for seeking condonation was-
+ Vacancy in the position of Junior Manager (F&A) during 01.07.2011 to 23.12.2011.
+ During 23.12.2011 to 31.07.2012, the Junior Manager looking into the legal affairs of the appellant did not have the legal knowledge and, therefore, he did not take steps to challenge the order of the Commr(A).
+ In November 2012, another Junior Manager (F&A) joined & since he had the requisite knowledge to appoint a counsel, they filed an appeal but the same was delayed.
The CESTAT while citing the apex court decisions in N.Balakrishnan vs. M.Krishnamurthy - 2002-TIOL-737-SC-LMT & Office of Chief Post Master General vs. Living Media India Ltd. - 2012-TIOL-123-SC-LMT rejected this application for condoning the delay with the following caustic remarks-
"5. If the appellant did not have the expertise they should have availed the services of an expert and there are enough number of counsels appointed by the Government for defending their cases. Therefore, the reason stated is merely of bureaucratic red tape. Therefore, we are not satisfied with the explanation given for the delay."
Consequently the appeals and stay applications were also rejected. We reported this order as 2013-TIOL-1080-CESTAT-MUM.
MSEDCL did not take this order lightly and lost no time in filing an appeal before the Bombay High Court.
Before the High Court, the appellant narrated the very same grounds taken before the CESTAT and submitted that there was bonafide ground for the delay and the explanation provided by them should have been considered as satisfactory.
The Counsel for the Revenue submitted that there was absolutely no substantial question of law arising from the factual finding; Not possessing knowledge of what is to be done further and in law cannot be a ground to condone the delay;duty lapses and non-availability of officials cannot be a ground by itself to condone the delay; If there is a vacancy in a particular position does not mean that the files could not have been taken to the next level or the superior level officer and eventually to the legal department.
The High Court inter alia observed-
"That Government departments and particularly on account of outsourcing of several functions are working with depleted staff strength. Similar is the position of the Maharashtra State Electricity Distribution Company Limited. Though the original Board has been divided and on functional lines, limited company has been established, yet, full staff strength has not been achieved. Similarly, in matters of taxation and particularly in Service Tax, there was somebody who could have applied his mind jointly with the legal department. The Finance and Accounts Manager is a crucial post. Its vacancy during the relevant period was, in the given facts and circumstances, a vital element and factor. It is not as if the reason was found to be false or the Appellant was totally negligent and callous or has ignored the legal proceedings completely. In such circumstances, by imposition of costs, the discretion could have been exercised in favour of a statutory entity and authority like the Appellant before us."
Holding that the Tribunal was in error while refusing to condone the delay and that its discretion had not been exercised fairly and reasonably, the appeals were admitted and disposed of finally.
The High Court condoned the delay in filing the appeals on the condition that the Appellant deposits costs quantified at Rs.25,000/-. And upon payment of the costs within a period of 4 weeks and submission of proof, the Tribunal was directed to restore the appeals and the stay applications to the file.
(See 2015-TIOL-408-HC-MUM-ST)
