Chandigarh

StateCommission

A/147/2016

Swagath Restaurant and Bar - Complainant(s)

Versus

Vikas Goel - Opp.Party(s)

V.K.Sachdeva & Gurpreet Kaur, Adv.

03 Aug 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Appeal No.	:	147 of 2016
Date of Institution	:	11.05.2016
Date of Decision	:	03.08.2016

 

Swagath Restaurant and Bar, SCO-7, Sector 26, Madhya Marg, Chandigarh through Mr.Manish Goyal, Director, M/s Apex Restaurants Private Limited, SCO No.7, Sector 26, Madhya Marg, Chandigarh.

……Appellant/Opposite Party

V e r s u s

Vikas Goel son of Sh.Mohan Lal, resident of House No.387, Sector 32-A, Chandigarh.

              ....Respondent/Complainant

BEFORE:         JUSTICE JASBIR SINGH (RETD.), PRESIDENT.

                        MR. DEV RAJ, MEMBER.

                        MRS. PADMA PANDEY, MEMBER

 

Argued by:       Sh.V.K. Sachdeva, Advocate for the appellant.

                        Sh.Rajat Nakra, Advocate for the respondent.

 

PER JUSTICE JASBIR SINGH (RETD.), PRESIDENT

                This appeal is directed against an order dated 19.02.2016, rendered by the District Consumer Disputes Redressal Forum-I, U.T., Chandigarh (hereinafter to be called as the Forum only) vide which, it partly allowed the complaint, filed by the respondent/complainant against the applicant/appellant/ opposite party.

2.         The appeal is barred by limitation. The applicant has calculated the period of delay of 80 days, whereas the office has indicated that there is delay of 38 days in filing this appeal.
3.         So far as merits of the case are concerned, in the face of judgment of this Commission, in the case of Mainland China Vs. Sh.Mintesh Jain, Appeal No.68 of 2016, decided on 13.06.2016, and also Circular dated 03.06.2015, issued by the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), this appeal is bound to succeed.
4.         Faced with above situation, application to condone delay aforesaid, has been opposed by Counsel for the respondent with great vigor. There is an attempt to defeat rights of the applicant/appellant on the basis of sheer technicalities.
5.         In application for condonation of delay, it is stated that order dated 19.02.2016, came to the knowledge of the applicant only when it received notice of the execution proceedings, from the Forum. It is stated that its Counsel intimated the applicant that the complaint was dismissed on 05.02.2016. (May be wrongly it was so stated). It was further stated that appeal was filed within 30 days from the date of knowledge, as such, it is within limitation.
6.         Above said prayer was opposed by the respondent/ complainant. In reply to the application for condonation of delay, it is stated that certified copy of the order dated 19.02.2016 was dispatched to the applicant on 25.02.2016, by the office of Forum-1. The order was received through registered letter by the applicant on 26.02.2016 and above said fact has been affirmed by the Staff of Bharat Sanchar Nigam Limited (BSNL).
7.         To support his contention that no case is made out to condone delay aforesaid, Counsel for the respondent/ complainant has placed reliance upon the ratio of judgments of the Hon’ble Supreme Court of India, in Basawaraj and another Vs. The Spl. Land Acquisition Officer, Civil Appeal No.6974 of 2013, decided on 22.08.2013 and Brijesh Kumar and Ors. Vs. State of Haryana and Ors., SLP (Civil) Nos.6609-6613 of 2014, decided on 24.03.2014.
8.         As is apparent from the facts of the present case, delay in filing the appeal is not huge. It is less than 40 days. Now, it is to be seen, as to whether, the said delay was intentional and it will disentitle the appellant to get condoned the same, to file this appeal or whether the delay was beyond control of the appellant and it has furnished sufficient grounds to condone the same. Before discussing above question, it is necessary to look into the principle of law laid down by the Hon'ble Supreme Court, as regard to condonation of delay. In Lanka Venkateswarlu (D) By Lrs. vs State Of A.P. and Ors., A.I.R. 2011 S.C. 1199: (2011) 4 S.C.C. 190, the Apex Court held as under:-

 (i).    The Courts generally adopt a liberal approach in considering the application for condonation of delay on the ground of sufficient cause under Section 5 of the Limitation Act.

 (ii).          Rules of limitation are not meant to destroy the rights of parties. They are meant to see that the parties do not resort to dilatory tactics, but seek their remedy promptly.

 (iii).          Once a valuable right has accrued in favour of one party as a result of the failure of the other party to explain the delay by showing sufficient cause and its own conduct, it will be unreasonable to take away that.”.

9.         In N.Balakrishnan v. M. Krishnamurthy, (1998) 7 Supreme Court Cases 123, there was a delay of 883 days, in filing application, for setting aside exparte decree, for which application for condonation of delay was filed, the Apex Court held as under:-

“It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court.

10. The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. The time- limit fixed for approaching the court in different situations is not because on the expiry of such time a bad cause would transform into a good cause."

                   The Hon'ble Supreme Court further observed in paragraphs 11, 12 and 13 which run thus:-

"11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.

12. A Court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain v. Kuntal Kumari (1969) 1 SCR 1006 and State of W.B. v. Administrator, Howrah Municipality (1972) 1 SCC 366.

13. It must be remembered that in every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. While condoning the delay, the court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite large litigation expenses. "

10.           In Jyotsana Sharda vs Gaurav Sharda, (2010-3) 159 P.L.R. D15, Delhi High Court, while condoning 52 days delay, in filing the appeal, observed as under:-

“No doubt, originally the Apex Court in Ram Lal Vs. Rewa Coalfield AIR 1962 SC 351 had held that while seeking condonation of delay under Section 5 of the Limitation Act the application must not only show as to why he did not file the appeal on the last day of limitation but he must explain each day's delay in filing the appeal. The later judgments of the Apex Court have considerably diluted this requirement of explaining each days delay by a party. The latest trend and the ratio cases which the Apex Court has laid down in the judgments is that the Court must adopt a liberal approach rather than pedantic approach while doing so. It must see the bonafides of the person who is preferring the appeal rather than seeing the quantum of delay which has been occasioned. Reliance in this regard can be placed on Collector, Land Acquisition, Anantnag and Anr. Vs. Mst. Katiji & Ors. AIR 1987 SC 1353”.

 

11.           Reading of the ratio of judgments mentioned above, makes it very clear that liberal approach needs to be adopted in condoning delay. Rights of the parties shall not to be defeated, on the basis of technicalities alone. Fair chance to contest a dispute must be granted to the contesting parties.
12.         At the time of arguments, by placing reliance upon an information received through the process of RTI Act, 2005, it is stated by Counsel for the respondent that the registered letter was delivered at the address of the applicant on 26.02.2016 and it has wrongly been said in the application that intimation qua order was not received. Be that as it may, there is nothing on record to show that, as to whom the said letter was delivered. The applicant is running a restaurant. Many employees may be available there. In such a situation, evidence needs to be there that the letter was handed over to a responsible person. Furthermore, it is stated by applicant that its Counsel intimated it that the complaint stands dismissed, on account of which, no efforts were made to get intimation regarding any further order passed.

                Otherwise also, as stated above, the delay in filing the appeal is very small i.e. less than 40 days and there appears to be no benefit to the applicant to file appeal beyond the period of limitation, especially when the service tax deducted was inconformity with the law i.e. in view of Circular dated 03.06.2015, issued by the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), as referred to above. It is also on record, that when intimation was received by the applicant qua pending execution, immediately, thereafter, the present appeal was filed. We are satisfied that there is sufficient reason to condone delay in this case. Benefit of ratio of judgments in cases Basawaraj and another and Brijesh Kumar and Ors. (supra) cannot be given to the respondent/ complainant. In both the cases, there was huge delay of more than about 5 ½ years and 10 years, respectively. Further, reasons given to condone the delay, in those cases, were also found to be insufficient by the Apex Court.

13.         In the present case, as has been said in earlier part of this order, on merits, the applicant has a very sound case. Its right cannot be jeopardize by looking into technical aspect of the matter alone. Accordingly, the delay stands condoned. The applicants stands disposed off.
14.         Further, it is on record that in his complaint, it was grievance of the complainant/respondent that when on 04.07.2015, he visited restaurant owned by the appellant, for goods consumed, amount was wrongly charged towards service charges and service tax. The Forum on getting response from the applicant found that the amount charged towards service charges was justified. To the contrary, it was found that the amount charged towards service tax was at a higher rate, was not correct. Accordingly, vide order dated 19.02.2016, following relief was granted to the respondent/complainant:-

“In view of the above discussion, the present complaint deserves to succeed and the same is partly allowed. OP is directed :-

(i)       To refund the excess amount of service tax illegally charged from the complainant.

(ii)      To pay Rs.10,000/- as compensation to the complainant for the harassment caused to him.

(iii)     To also pay a sum of Rs.7,000/- to the complainant as litigation expenses.

This order be complied with by the OP within one month from the date of receipt of its certified copy, failing which it shall make the payment of the amount mentioned at Sr.No.(ii) above, with interest @ 12% per annum from the date of filing of the present complaint till realization, apart from compliance of directions at Sr.No.(i) & (iii) above.”

15.         We have heard Counsel for the parties, and, have gone through the evidence, and record of the case, carefully. 
16.         The core issue which needs consideration, is, as to whether, service tax is payable on service charges also and, if yes, at what rate. It was vehemently contended by Counsel for the respondent/complainant before the Forum that qua the amount of service charges, it was not open to the appellant to impose tax thereon and further at a higher rate of 5.6% of the total amount charged i.e. price of goods plus (+) service charges etc. It was further contended by him that service tax at the maximum can be charged @4.9%. To say so, reliance was placed on Circular dated 10.04.2015, issued by the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit). In Clause No.5.1 of the said Circular it is stated that service tax is leviable @4.944%. It was further stated that in that Circular it is clearly mentioned that the said rate will continue unchanged till the date, it will be notified in due course.

                The argument raised is liable to be rejected. Thereafter, another Circular was issued by the above said Ministry on 03.06.2015, wherein it was stated that rate of service tax will be 5.6% of the total amount charged by the concerned person. In view of above, it cannot be said that service tax @5.6% of the total amount, charged by the appellant was not justified, as has been held by the Forum, in the order impugned.

                So far as charging of service tax on the amount charged towards service charges is concerned, this Commission, in Mainland China's case (supra) while deciding this issue, has observed as under:-

“It is not in dispute that as per Rule 2(c) of the Service Tax (Determination of value) Rules 2006, service provider is authorized to charge service tax on 40% of the bill amount only and 60% in case of outdoor catering. The Forum while interpreting the provisions of Rule 2(c) of the Service Tax (Determination of Value) Second Amendment Rules, 2012, notified on 06.06.2012 w.e.f. 01.07.2012,  came to the conclusion that excess service tax was charged on service charges levied by the appellant. It was a specific defence of the appellant that service tax is payable on service charges as well.

We have gone through the provisions of Rule 2(c) of the Service Tax (Determination of Value) Rules 2006,  and Rule 5 of the Rules and explanations added thereto and are satisfied that service tax is leviable on service charges also. Rule 5 aforesaid shows as to how to calculate taxable service. The explanations added with this Rule makes it very clear that on service charges also VAT is leviable. In view of the above, the order under challenge, needs interference of this Commission, and the same deserves to be set aside.”

17.         It has specifically been said that on service charges, service tax can be imposed.  In view of the above, the order passed by the Forum, needs interference of this Commission, and is liable to be set aside.
18.         No other point, was urged, by Counsel for the parties
19.         For the reasons recorded above, the appeal is accepted, with no order as to costs. The order of the Forum is set aside.
20.         Certified copies of this order, be sent to the parties, free of charge.
21.         The file be consigned to Record Room, after completion

Pronounced.

03.08.2016

Sd/-

[JUSTICE JASBIR SINGH (RETD.)]

PRESIDENT

 

Sd/-

(DEV RAJ)

MEMBER

 

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(PADMA PANDEY)

        MEMBER

 

 

Rg