Madras HC Excuses 247-Day COVID-Linked Delay, Restores Appeal in ₹7.5 Lakh Service Tax Case [Read Order]

In a recent ruling, the Madras High Court condoned a 247-day delay in filing a service tax appeal, citing the impact of the COVID-19 pandemic and invoking a special Goods and Services Tax (GST)notification to restore the appeal, which had been dismissed for exceeding the condonable limit, and directed the tax authorities to hear the case on merits.

The petitioner, A. Mahalingam, had challenged an appellate order dated 31 December 2024 that dismissed his appeal as time-barred. The original tax demand—amounting to ₹7.53 lakh, including Swachh Bharat and Krishi Kalyan cesses—was raised in July 2022 after authorities found he had short-declared service income worth ₹51.19 lakh.

The petitioner argued that the pandemic and subsequent health issues prevented him from responding to the initial show-cause notice issued in April 2021. He only filed the appeal after recovery proceedings began, by which time the delay had exceeded the statutory condonable limit under Section 85 of the Finance Act, 1994.

While the department submitted that the appeal was filed under Section 85 of the Finance Act, 1994 is subject to a prescribed limitation period, including an outer limit for condonation of delay. So It was contended that any delay beyond such an outer limit cannot be condoned.

After hearing the submission, Justice D. Bharatha Chakravarthy took note of Notification No. 53/2023-Central Tax, issued on 2 November 2023, which allowed certain appeals filed beyond the usual time frame to be treated as valid due to pandemic disruptions.

The court observed that “In view of the peculiar and special circumstances prevailing in the present case, I am of the view that the delay deserves to be condoned and the appeal ought to be considered on merits.”

The Court set aside the impugned appellate order and directed the appellate authority to hear the petitioner's case on the merits. It also ordered the lifting of the freeze on his bank account, noting that the entire tax liability had already been discharged.

Accordingly, the writ petition was disposed of, and the connected miscellaneous petitions were closed.

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