Condonation of delay in GST Appeals and Limitation Act, 1963

Introduction

While a combined interpretation of Sub-section (1) and Sub-section (4) of Section 107 of the CGST Act, 2017 establishes a four-month time limit for filing an appeal against a decision or order, it’s important to recognize that the provisions of Section 107 are not absolute. This means that the prescribed time limit, while generally applicable, may be subject to exceptions or judicial interpretations in specific circumstances. It is subject to the general provisions, contained in the Limitation Act, 1963. A balance has to be maintained between the expeditious end of litigation and the right of the litigant.  The main object to limit any legal action is to give effect to the maxim ‘interest reipublicaeut sit finis litium’, which means that in the interest of the State it is required that there should be a limit to litigation and also to prevent any kind of disturbance or deprivation of what may have been acquired in equity and justice or by way of long enjoyment or what may have been lost by a party’s own inaction, negligence or leaches (acquiescence). The intention in accepting the concept of limitation is that “controversies are restricted to a fixed period of time, lest they should become immortal while men are mortal.”

Legal framework on Condonation of delay in GST Act

For exercising the right to appeal, by any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an Adjudicating Authority, the initial statutory period is three months from the date on which the said decision or order is communicated to such person under section 107(1) of GST Act, 2017. The appellate authority is further empowered to condone the delay to maximum period of one month , if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months under section 107(4) of GST Act,2017.

Judicial view in respect of provisions of section 107

The Hon’ble Courts, as recent judgments show, are highly reluctant to such a period of limitation, particularly where there is no express or implied exclusion of the applicability of the Limitation Act, 1963. The observation of the Hon’ble Kolkata High Court in S.K. Chakroborty & sons vs. Union of India & Ors is worth mentioning here.

“19. Section 107 of the Act of 2017 does not exclude the applicability of the Act of 1963 expressly. It does not exclude the applicability of the Act of 1963 impliedly also if one has to consider the provisions of Section 108 of the Act of 2017 which provides for a power of revision to the designated authority, against an order of adjudication. In case of revision a far more enlarged period of time for the Revisional Authority to intervene has been prescribed. Two periods of limitations have been prescribed for two different authorities namely, the Appellate Authority and the Revisional Authority in respect of the same order of adjudication. Any interference with the order of adjudication either by the Appellate Authority or by the Revisional Authority would have an effect on the defaulter/noticee. Section 107 does not have a non-obstante clause rendering Section 29(2) of the Act of 1963 non applicable. In absence of specific exclusion of the Section 5 of the Act of 1963 it would be improper to read an implied exclusion thereof. Moreover, Section 107 in its entirety has not expressly stated that, Section 5 of the Act of 1963 stands excluded”.

The same ratio has also been upheld by the Hon’ble Calcutta High Court in Green Filed Agrotech Vs. The State of West Bengal & Ors. [WPA 21521 of 2024] where the Hon’ble Court has opined “Admittedly in this case, it would appear that the appeal had been dismissed solely on the ground that the same had been filed beyond one month of the time prescribed for filing the appeal. The appeal therefore, was obviously barred by limitation. However, at the same time, the aforesaid could not prevent the petitioner from maintaining an application for condonation of delay by invoking the provisions of Section 5 of the Limitation Act, 1963”.

In Arvind Gupta Vs Assistant Commissioner of Revenue State Taxes (Calcutta High Court) [WPA/2904/2023] , the Hon’ble Court observed “ In view of the aforesaid settled position of law, this court is of the considered view that it was well within the power of the appellate authority to consider the prayer of the petitioner for condonation of delay. The impugned order passed by the appellate authority that there is no scope to condone the delay beyond four months suffers from infirmity”. The court has stressed that the appellate authority has inherent power to condone delay beyond the statutory period of time if situation warrants it.

Objective of the Limitation Act, 1963 and relevant provisions

The basic concept of limitation is relating to fixing or prescribing of the time period for barring legal actions. According to Section 2 (j) of the Limitation Act, 1963, ‘period of limitation’ means the period of limitation prescribed for any suit, appeal or application by the Schedule, and ‘prescribed period’ means the period of limitation computed in accordance with the provisions of this Act.

According to Halsbury’s Laws of England, the Main Objects of the Law of Limitations are as follows:

• Long dormant claim has more of cruelty than justice in them.
• A defendant might have lost the evidence to dispute the State claim.
• A person with only good cause of actions should pursue them with.
• There are two major considerations on which the Doctrine of Limitation and Prescription are based on – firstly, the rights which are not exercised for a long time are said to be as non-existent and secondly, the rights which are related to property and rights which are in general should not be in a state of constant uncertainty, doubt and suspense.

In the matter of B.B. & D. Mfg. Co. v. ESI Corporation, AIR 1972 SC 1935 it was observed

by the Hon’ble Supreme Court that-

“The object of the Statutes of Limitations to compel a person to exercise his rights of action within a reasonable time as also to discourage and suppress stale, fake or fraudulent claims. While this is so, there are two aspects of the Statutes of Limitation — the one concerns with the extinguishment of the right if a claim or action is not commenced within a particular time and the other merely bars the claim without affecting the right which either remains merely as a moral obligation or can be availed of to furnish the consideration for a fresh enforceable obligation. Where a statute prescribing the limitation extinguishes the right if affects substantive right while that which purely pertains to the commencement of action without touching the right is said to be procedural”.

The consistent invoking of Section 5 and Section 29(2) of the Limitation Act, 1963 by the Courts in the matter of condonation of delay is required to be mentioned here.

ANALYSIS OF SECTION 5

Section 5 states: “Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”

The provision applies to Appeals and Applications. It explicitly excludes suits from its purview, meaning condonation of delay cannot be invoked for filing a suit beyond the limitation period.

What Constitutes “Sufficient Cause”?

The absence of the definition of the term “sufficient cause” in the Limitation Act, grants the courts wide discretion in determining whether a cause is sufficient or not. Over the years, judicial interpretations have provided guidance on what may or may not constitute sufficient cause. General grounds that courts have accepted as sufficient cause include:

• Serious sickness and /or infirmity
• Imprisonment
• Legal misadvise from counsel
• Natural calamities or other uncontrollable events
• Act of God
• Delay in procuring necessary documents from authorities

However, mere negligence or lack of diligence on the part of the litigant is generally not considered sufficient cause. Courts have consistently held that the delay should not be due to inaction or lack of bona fide intent.

Judicial Interpretation of Condonation of Delay

The judiciary has played a crucial role in determining the doctrine of condonation of delay by interpreting the scope and application of Section 5 of the Limitation Act. Various landmark judgments provide clarity on how the judiciary exercises its discretionary powers under this provision.

1. Collector Land Acquisition v. Mst. Katiji & Ors. (1987)

In this landmark case, the Supreme Court of India laid down important principles for interpreting the doctrine of condonation of delay. The court held that a liberal approach should be adopted when dealing with condonation applications, especially when public interest is involved. The court emphasised that:

• Substantial justice should be preferred over technical considerations.
• Litigants do not gain any advantage by delaying the filing of an appeal.
• Each day’s delay must be explained, but this requirement should be applied in a pragmatic, not   pedantic, manner.

The court highlighted that refusing to condone a delay could result in a meritorious case being dismissed purely on technical grounds, which would be against the interests of justice.

2. Balakrishnan v. M.A. Krishnamurthy (1998)

In Balakrishnan v. M.A. Krishnamurthy, the Supreme Court held that the law of limitation is based on public policy and aims to prevent parties from being penalised for delays caused by circumstances beyond their control. The court reiterated that the term “sufficient cause” should be interpreted liberally, and that the goal of the Limitation Act is not to destroy the rights of parties but to ensure timely pursuit of remedies.

3. State of West Bengal v. Howrah Municipality (1972)

In this case, the Supreme Court emphasised that the term “sufficient cause” should be construed liberally in favour of granting condonation to prevent injustice. The court observed that procedural technicalities should not override the fundamental principle of ensuring access to justice.

ANALYSIS OF SECTION 29(2)

The provision has aptly been described as legislative shorthand. The judiciary’s search for a provision for determination of the period of limitation prescribed by other laws reached its goal in the provision. Essentially this provision by enacting a legal fiction made the provisions of extension and computation contained in Sections 4 to 24 of the Limitation Act 1963 applicable for determining the period of limitation prescribed by the special or local law. By this legislative device the special or local law is spared the trouble of repeating the provisions of the Sections 4 to 24 of the Limitation Act in the respective special or local law.

Three essential parameters necessary for application of the shorthand are:

• The special or local law must contain a provision for limitation in connection with any suit, appeal or application,
• The period of limitation prescribed by the local or special law must be different from that prescribed in the schedule to the Limitation Act, 1963, and
• The special or local law must not expressly exclude either wholly or to an extent application of Sections 4 to 24 of the Limitation Act, 1963.

These three parameters gave birth to three questions before the courts while deciding different cases. These questions are: What is special or local law? What is the meaning of different? And what do the words “expressly exclude” mean?

The first of these questions can be and has been answered with comparative ease and clarity. But the rest two need some deep discussion.

“Different”

Normally to be different would require both the special or local law and the limitation Act to provide for period of limitation for the identical suit/appeal or application. The settled view is that the period of limitation by the Special or Local law may be different even if there is no corresponding period prescribed in the schedule of the Limitation Act for the suit, appeal or application.

“Expressly Excluded”

The plain meaning of the words express exclusion will be that the special or local law has to make a provision stating clearly and directly that all or any of the group of sections from 4 to 24 of the Limitation Act shall not apply for determination of the period of limitation prescribed by such a law. But the Courts have interpreted the phrase to include exclusion by necessary implication as well. The exclusion by necessary implication may be posited by the language, nature and scheme of the special Act when it may be a exclusive complete code. This may also be by making a provision similar to one or the other of Section 4 to 24 and failing to make such a provision in some other provisions of the special law.

In Hukumdev Narain Yadab Vs Lalit Narain Misra, [AIR 1974 SC 480 ]the Supreme Court discarded the Dictionary meaning of the words “expressly excluded” and held thus :-

“As usual the meaning given in the Dictionary has been relied upon, but what we have to see is whether the scheme of the special law, that is in this case, the Act, and the nature of the remedy provided therein are such that the Legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. In our view, even in a case where the special law does not exclude the provisions of Section 4 to 24 of the Limitation Act by an express reference, it would none-the-less be open to the Court to examine whether and to what extent the nature of those provisions or the nature of the subject matter and scheme of the special law exclude their operation.”

Conclusion

The Hon’ble Courts have consistently been eager to make allowances for delay in GST appeals as long as there are valid and sufficient reasons for the delay. Section 5 of the Limitation Act, 1963 plays a pivotal role, as it grants the appropriate authority the discretion to condone delay when “sufficient cause” is exhibited. when a Statutory Authority having quasi judicial functions enforces the given period of limitation under a special or local law as the case may be, by the combined operation of section 29(2) read with Section 4 to 24 of the Limitation Act, Section 5 of the Limitation Act clearly gets attracted to such proceedings before the Statutory Authority exercising quasi judicial powers under the concerned special or local statute. In essence, the ability to seek an extension of time under Section 5 is available in proceedings before quasi-judicial authorities operating under special or local laws when Section 29(2) is triggered. The courts have acknowledged the principle of substantial justice which asserts that procedural errors should not take precedence over the fundamental right to a fair hearing. Even the rigid provisions of GST Act, 2017 must yield to this elementary right.