Rectification Applications u/s 74 of Finance Act Can Extend Appeal Limitation Period If Disposed of Properly: CESTAT [Read Order]

The Executive Officer, Tharamangalam Selection Grade Town Panchayat, the appellant, received an Order-in-Original on 09.09.2014 under the service tax provisions. Instead of filing an appeal immediately, the appellant filed a rectification application under Section 74 of the Finance Act, arguing that there was a risk of double taxation and that the application was within the two-year statutory period allowed for rectification.

The rectification order was communicated to the appellant on 24.01.2015, and the appellant filed an appeal before the Commissioner (Appeals) on 05.03.2015. The appellant argued that the appeal was filed within the 60-day limitation period calculated from the date of the rectification order.

How to Audit Public Charitable Trusts under the Income Tax Act Click Here

The department rejected the appeal as time-barred, claiming that the limitation period should be calculated from the date of the original order, not from the date of the rectification order.

The appellant's counsel argued that the rectification application was validly filed and disposed of under Section 74 and that the limitation period for appeal should begin from the date of the rectification order, making the appeal timely. The counsel also argued that the rectification process was necessary to prevent double taxation.

The revenue counsel argued that the appeal was correctly rejected as time-barred and that the limitation period should be calculated from the original order date. The revenue also argued that a rectification application does not extend the limitation period for filing an appeal.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the First Appellate Authority should have examined whether the rectification application was filed and disposed of under law before dismissing the appeal as time-barred. The tribunal observed that since the rectification application was lawfully disposed of, the date of the rectification order should be treated as the start date for calculating the appeal limitation period.

3000 Illustrations, Case Studies & Examples for Ind-AS & IFRS, Click Here

The tribunal clarified that the appellant could not re-agitate issues that were not raised in the rectification application when the appeal is heard again. The tribunal directed the Commissioner (Appeals) to hear the appeal on merits within 90 days, limited to the issues raised in the rectification application, while following principles of natural justice. The appellant’s appeal was allowed and remanded for disposal on the merits.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates