Vyas Traders Vs Additional Commissioner (Allahabad High Court)
The Allahabad High Court decided two connected writ petitions involving rejection of statutory appeals on the ground of limitation under the UPGST Act, 2017. Since both matters involved common questions of fact and law, they were heard and decided together with consent of the parties. No further affidavits were filed, and the petitions were decided at the admission stage.
Leading Writ Petition
The petitioner, a registered service provider under the UPGST Act, received a notice under Section 61 on 26.12.2023 alleging excess Input Tax Credit (ITC) claim in GSTR-3B compared to GSTR-2A. After considering the reply, the Deputy Commissioner passed an order under Section 73 on 22.04.2024 imposing tax of ₹46,14,911 and penalty of ₹4,61,491 (total ₹50,76,402).
The petitioner filed a rectification application under Section 161 on 07.05.2024, which was rejected on 18.09.2024. Within 10 days, an appeal under Section 107 was filed before the Additional Commissioner (Appeals). However, the appeal was rejected on 27.10.2024 as time-barred.
Connected Writ Petition
In the second matter, the petitioner purchased stainless steel goods from a seller, which were transported from Delhi to Asansol, West Bengal, passing through Uttar Pradesh. The goods were intercepted on 08.11.2024. Due to a mistake by the driver, incorrect documents were produced. A seizure order (MOV-06) was issued on 14.11.2024, followed by a penalty order (MOV-09) on 22.11.2024 under Section 129(3), imposing penalty of ₹48,57,995 on the driver, treating the goods owner as not having come forward.
The petitioner initially challenged this penalty through a writ petition, which was dismissed as withdrawn on 15.04.2025 with liberty to file an appeal. Thereafter, the petitioner filed an appeal on 08.05.2025 along with a delay condonation application and deposited 25% of the disputed amount. This appeal too was rejected on 22.05.2025 as barred by limitation.
Petitioner’s Argument
In both matters, the petitioner argued entitlement to the benefit of Section 14 of the Limitation Act, 1963, which allows exclusion of time spent pursuing a remedy in good faith before an incorrect forum.
For the leading petition, it was argued that the rectification application under Section 161 was filed within time and pursued bona fide, and therefore, the period during which it remained pending should be excluded when computing limitation for filing the appeal.
For the connected petition, the petitioner contended that time spent prosecuting the earlier writ petition should similarly be excluded while computing limitation for the statutory appeal.
State’s Stand
The Standing Counsel did not dispute that the period spent in rectification proceedings could be excluded and conceded that the benefit of Section 14 of the Limitation Act would apply in both matters.
Court’s Findings
The Court noted that the issue regarding exclusion of time spent in rectification proceedings was already settled by a Division Bench judgment of the High Court in M/s Prakash Medical Stores, which held that when a rectification application under Section 161 is filed within limitation and pursued bona fide, the limitation period for filing an appeal remains in abeyance during its pendency. That period must therefore be excluded.
Applying this principle, the Court held that the appeal in the leading petition could not be treated as time-barred.
Regarding the connected petition, the Court observed that the petitioner had first approached the High Court and then, after withdrawal of the writ petition with liberty to file an appeal, promptly filed the appeal. The Court held that the petitioner was entitled to exclusion of this period under Section 14, as the remedy had been pursued bona fide before a wrong forum.
Final Directions
The High Court set aside:
