Condonation of Appeal Filing Delay under CGST Act, 2017 — Liberal vs. Strict Interpretation –
Under the CGST Act, 2017, taxpayers must file appeals within three months, with an additional month condonable for sufficient cause. A key issue arises when appeals are delayed beyond this period due to pending rectification applications. The Madras High Court in Sas Hotels and Enterprises adopted a liberal approach, allowing a 58-day delay, holding that genuine pendency of rectification can justify condonation to ensure justice. Conversely, the Allahabad High Court in Garg Enterprises took a strict stance, ruling that the CGST Act is a self-contained code, and delays beyond four months are non-condonable, even if rectification was pursued in good faith. This view aligns with rulings from Delhi and Chhattisgarh High Courts. The divergence highlights the need for taxpayers to consider jurisdictional trends carefully, as the interpretation of limitation provisions under GST law remains unsettled.
Legal Framework:
Section 107(1) – CGST Act, 2017: A taxpayer must file an appeal within three months from the date of communication of the order.
Section 107(2): The Department is required to file an appeal within six months from the date of communication of the order.
Section 107(4): The Appellate Authority may allow the filing of an appeal within a further one month, provided it is satisfied that the appellant was prevented from doing so by sufficient cause.
Section 161 – CGST Act, 2017 (Rectification of Mistake): Allows filing a rectification application within three months of the original order, in cases where a mistake apparent from the record exists.
Issue for Consideration:
When there is a delay in filing an appeal beyond the four-month statutory limit (three months + one month condonable) due to the pendency of a rectification application, can such delay be condoned?
Liberal Interpretation – Madras High Court:
In Sas Hotels and Enterprises v. Assistant Commissioner, the Hon’ble Madras High Court allowed condonation of a 58-day delay beyond the total permissible limit under Section 107(4).
The appellant had filed a rectification application which was rejected.
Subsequently, an appeal was filed against the original order, but it was dismissed as time-barred.
On writ petition, the High Court held that genuine pendency of rectification can constitute sufficient cause for condonation.
The court directed that the appeal be entertained upon an additional 5% pre-deposit, in addition to the 10%.
Key Takeaway: The Madras High Court adopted a purposive approach, prioritizing justice over the narrow application of limitation law in a bona fide case.
Strict Interpretation – Allahabad High Court (UP):
In contrast, the Allahabad High Court, in the case of Garg Enterprises v. State of U.P., adopted a strict and literal interpretation:
Held that the CGST Act is a self-contained code.
Section 5 of the Limitation Act is inapplicable, and delay beyond one month cannot be condoned.
Even if rectification was pursued in good faith, the statutory timelines of Section 107 prevail.
Once the four-month timeline lapses, neither the taxpayer nor the Appellate Authority has legal room to entertain the appeal.
This approach aligns with several judgments around the country, including the Delhi and Chhattisgarh High Courts, relying on the principle laid down in Singh Enterprises v. CCE (2008 SC).
Author’s Comment:
While the Madras High Court has interpreted the law to allow condonation beyond statutory limits under genuine circumstances, the Allahabad High Court and other benches emphasize a strict interpretation—no delay can be condoned beyond the explicit statutory limit. This is an evolving area of interpretation under GST law, and appellants should carefully consider the jurisdictional approach before proceeding.
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