Appeal Period and Condonation of Delay beyond Appeal Period Under GST

“Navigate GST Appeals: Learn about Appeal Period, Condonation of Delay, and Judicial Perspectives. Section 107 of CGST Act stipulates a 3-month appeal period, extendable by 1 month with justifiable cause. Explore litigations on communication of decisions, varying interpretations on appeal periods, and contrasting court decisions on condonation of delay. Unravel the legal intricacies, understand the significance of due diligence, and explore potential reasons for condonation. Stay informed to protect your interests in GST appeals. Delve into recent case studies and expert insights.”

Section 107 of the CGST Act provides a specific time within which the appeal can be entertained by the first appellate authority against any decision or order passed under the CGST Act or the SGST or UTGST Act by an adjudicating authority. Sub-section (1) provides a time limit of three months from the date of communication of such decision or order.

COMMUNICATION OF DECISION OR ORDER – What amounts to communication of the decision or order -whether it is the date of uploading of the order on the GST portal or any one of the other methods prescribed under Section 169 of the CGST Act, is under litigation. So, to be on the safer side, if the decision or order is communicated by any of the methods prescribed under Section 169, the earliest communication should be taken as the date of communication of the order. For eg if the order is uploaded on the GST portal on 02.09.2023 and the order is also communicated via email, to the address provided at the time of registration or as amended from time to time, on 25.08.2023, then, 25.08.2023 should be taken as the date of communication of the decision or order and appeal period calculated accordingly.

EXTENSION OF APPEAL PERIOD – In terms of Sub-section (4) of Section 107 of the CGST Act, if the Appellate authority is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the period of three months, he may allow it to be presented within a further period of one month.

From the above provisions it could be seen that an aggrieved person, in addition to the normal appeal period of three months, has an additional appeal grace period of one more month, to file appeal, provided, he could justify that he was prevented by sufficient cause from filing appeal within the normal appeal period. Thus, a total of four-month time period is available to an aggrieved person to file appeal before the first Appellate authority.

APPEAL PERIOD IN DAYS – A question arises as to whether ‘month’ as mentioned in the said provisions, is to be considered as comprising of 30 days or the actual number of days in the concerned months, for the purpose of computing the appeal period under Sec 107.

In a case before Allahabad HC [Writ Tax no. 96 of 2023- Shri Ram Ply Product], the number of days to be accounted as the appeal period of four months under Section 107 was under dispute. Para 5 of the order in the case passed on 21.4.2023 may be referred to, which is as under-

‘Bare reading of the provisions of Section 107 of the Act, 2017 reflects that it is not 120 days, but it is four months and, therefore, it would depend upon the date on which date the adjudicating authority passes the order. The four months may be of 121 days or 122 days, as the case may be.’

As could be seen from the above decision, that the actual number of days in the particular month in which the Order has been communicated and that, in the subsequent three months, are to be taken into account and not just 120 days, for the purpose of computing the appeal period. Thus, the statutory allowed appeal period with extension of one month could be ranging from 120 days to 122 days depending on the month in which the order has been communicated. In some cases, though, without giving any decision on the no. of days to be allowed as appeal period, Courts have referred to the appeal period as 120 days. However, as the referred decision has specifically given an order as to the number of days to be accounted for, as appeal period, the same could be taken as an authority on the matter.

CONDONATION OF DELAY BEYOND THE ALLOWED APPEAL PERIOD

What happens if the taxpayer, due to some reason, is not able to file appeal under Section 107 of the CGST Act within the prescribed period of four months and proceeds to file appeal beyond the said appeal period. In this respect, there are contradictory decisions passed by various Courts, some of which are highlighted below-

SITUATIONS WHERE DELAY IN FILING APPEAL WITHIN APPEAL PERIOD HAS BEEN CONDONED –

a) In a case filed before Madras High Court [WP NO. 19103 OF 2023- SHREE AGENCIES- Order dt. 27.6.2023], the petitioner had represented that due to the attachments of his bank accounts, his day-to-day activities both personally and commercially was affected and he could not make the payment of 10% of the pre-deposit of tax as required for filing appeal.

In the said case, the delay in filing appeal, which was a little over one month, was condoned and liberty given to file appeal within one week of the order and the same shall be taken on file by first appellate authority without reference to limitation.

b) In another case before the Madras High Court [WP NO. 17600 & 17604 OF 2023- Order dt. 14.6.2023- SRI MUTHURAMMAN TRADERS], there was a delay of 10 days in filing the appeal, beyond the statutory appeal period. It was represented by the petitioner that he was not aware of the uploading of the impugned order on the GSTIN portal and that he had not received any intimation of the same, more so over, that the mail id given was that of his sales tax consultant.

The delay of 10 days was also condoned by the Hon’ble High Court.

c) Similarly, a delay of 27 days beyond the statutory appeal period was also condoned by Calcutta High Court in the case of petition [WPA NO. 304 OF 20 23- SIKHA DEBNATH-Order dt.10.2.2023].

–   NON-CONDONATION OF DELAY

On the other hand, there are a couple of High Court decisions which have refused to condone the delay citing that there is no power to condone the delay under GST Law.

i) In a case before the Kerala HC [WP(C) No.15574 OF 2023- PENUEL NEXUS P LTD. Order dt. 13.6.23], appeal was filed against order cancelling GST registration after 209 days which was beyond statutory period fixed for filing appeal.

During deliberation on the issue, the Hon’ble HC referred to two Apex Court decisions- a)Singh Enterprises v. CCE [2008] 3 SCC 70] = 2008 (221) E.L.T. 163 (S.C.)] and b)  CCE & Customs v. Hongo India (P.) Ltd. [(2009) 5 SCC 791] = 2009 (236) E.L.T. 417 (SC)] interpreting Section 35 of the Central Excise Act, 1944, which, held as under-

“8. The Commissioner of Central Excise (Appeals) as also the Tribunal being creatures of statute are not vested with jurisdiction to condone the delay beyond the permissible period provided under the statute. The period up to which the prayer for condonation can be accepted is statutorily provided… .. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only up to 30 days after the expiry of 60 days which is the normal period for preferring appeal. Therefore, there is complete exclusion of section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days’ period”.

Relying on the above interpretation, it was held as under-

“10. The Central Goods and Services Tax Act is a special statute and a self-contained code by itself. Section 107 has an inbuilt mechanism and has impliedly excluded the application of the Limitation Act. It is trite, that the Limitation Act will apply only if it is extended to the special statute. It is also rudimentary that the provisions of a fiscal statute have to be strictly construed and interpreted.”

ii) In a case before the Tripura HC [WP (C) Nos. 338 and 345 of 2023_SANJIB KUMAR PAL-Order dt.1.8.2023] it was held as under –

“Since the limitation for filing appeals is prescribed under section 107(4) of the Tripura State Goods and Services Tax Act, 2017 being a special statute, the same would be governed thereby. Any plea for condonation of delay relying upon the Limitation Act, 1963 beyond the statutory period prescribed under section 107(4) of the Act of 2017 cannot be accepted.”          

iii) In a case before Patna High Court [Civil Writ Jurisdiction no. 82 of 2023- VISHWANATH TRADERS- Order dt. 12.4.2023], the assessment order was passed on 12.3.2022. Taking into account, the saving of limitation granted by the Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020, In Re: Cognizance For Extension of Limitation, due to the pandemic situation, limitation was saved between 15-3-2020 till 28-2-2022. It was also directed that an appeal could be filed within ninety days from 1-3-2022. Hence, an appeal could have been filed on or before 29-5-2022, which provision was not availed by the petitioner. The appeal was filed only on 8.8.2022, thereby, with a delay of two months and ten days.

In the above circumstances, it was held that there was no reason to invoke the extraordinary jurisdiction under Article 226, especially since it is not a measure to be employed where there are alternate remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. Accordingly, the WP was dismissed.

The above order was upheld by the Hon’ble Supreme Court [SLA(C) no.15594 of 2023-Order dt. 4.8.2023]

As could be seen from the above conflicting and contradictory decisions, the decisions refusing to condone the delay has either not been quoted in the petitioner’s submission or has been passed after the decisions allowing condonation of delay in filing appeal. Department, henceforth, will invariably be quoting the said decisions, in favour of the department, to deny the request for condonation of delay in filing appeal under Section 107 of the GST Act and the chances of getting favourable decisions from the Courts condoning the delay also appears bleak. However, there will invariably be justifiable reasons, mostly due to technical glitches or oversight which could deny a tax payer the opportunity of filing appeal, even though, he may be having a very strong case on merits and possibly also involving substantial amount. It is therefore expected that, atleast, in exceptional cases, Courts distinguish the cited cases and take a lenient view allowing condonation of delay in filing appeal beyond the appeal period of four months under Section 107 of the CGST Act.

From the Apex Court decision in the case of Vishwanath Traders, there is still a glimmer of hope, as the Court has not outrightly rejected the appeal. It has stated that the petitioner was not diligent enough in availing the alternate appeal remedy available to him. In other words, if the petitioner could substantiate that he had acted diligently to avail the remedy of appeal available to him but was prevented due to some exceptional circumstances from filing the appeal, then I believe the petitioner could have a chance to get a lenient view in invoking the extraordinary jurisdiction under Article 226 and get a favourable decision condoning the delay.

Dwelling further into the matter, as to, if at all, condonation of delay is to be allowed, what are the other plausible reasons which might convince the Courts to condone the delay. I would first like to refer to the Apex Court decision in the case of RAMLAL vs. REW COALFIELDS [AIR 1962 S.C. 361] which held that bona fides and due diligence are material and relevant factors for consideration of condonation of delay and that even after sufficient cause has been shown by the party he is not entitled to the condonation of delay as a matter of right. It has also been held by the Supreme Court that once the limitation period is over the appellant is called upon to explain the day-to-day delay.

As already pointed out, if the aggrieved person is able to substantiate that he was diligent enough in availing the remedy the same might be considered by the Courts but the same cannot be claimed as a matter of right. He is also bound to explain the reasons for each day of delay.

Further reference may be had to a Patna High Court decision in the case of petition filed by Punit Kumar Choubey [Civil Writ Jurisdiction no. 9975 of 2023] wherein the delay in filing appeal by one month and 12 days was not condoned pointing out the petitioner’s failure to respond to the intimation regarding discrepancy found during assessment as also failure to respond to reminders, SCN and Orders issued in the matter and also failing to attend the personal hearing fixed in the matter. Further, relying on the Supreme Court decision in the case of Gujarat Ambuja Cement Ltd. [(2005) 6 SCC 499] it was pointed out that there was no jurisdictional error, violation of principles of natural justice or abuse of process of Court averred or argued by the petitioner in the said WP, necessitating invoking the extraordinary jurisdiction under Article 226 of the Constitution.

The ratio laid down in the relied upon Apex Court decision finds echo in another Apex Court decision in the case of MAGAD SUGAR & ENERGY LTD. vs. STATE OF BIHAR [SC LL 2021 SC 495] which lays down that existence of alternate remedy does not bar exercise of writ jurisdiction if order is challenged for want of jurisdiction. The bench also noted that there are exceptions to the rule of alternate remedy, which are: (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation Is challenged. Similar decision has been given by the Hon’ble Supreme Court in the case of Asstt. CST vs. Commercial Steel Ltd.[ (2021) 130 taxmann.co 180/88 GST 799].

CONCLUSION – Taxpayers should therefore be diligent and vigilant on keeping track of the orders uploaded on the portal or communicated to them by any one of the methods prescribed under Section 169 of the CGST ACT and take immediate remedial action to file appeal under Section 107 of the CGST Act in deserving cases, within the appeal period of four months. If there is a delay in filing the appeal, the following factors are relevant for the aggrieved person-

1. He has to establish that he was diligent enough in pursuing the filing of appeal.

2. He has to prove that he was prevented from sufficient cause in filing of the appeal in time and that due to the exceptional circumstances, there was a delay in filing of the appeal within the appeal period of four months.

3. He may also have to give reasons for each day of delay.

4. Article 226 of the Constitution confers very wide powers on the High Court, nonetheless, the remedy of writ is an absolutely discretionary remedy.

5. Condonation of delay cannot be claimed as a matter of right.

6. High Courts may exercise the powers under Article 226 if it comes to the conclusion that a) there has been a breach of principles of natural justice or due procedure required for the decision has not been adopted, or, b) where the orders and proceedings are wholly without jurisdiction, or, c) where there has been abuse of the process of Courts, or, d)when the vires of an Act is challenged.

Thus, if a delay in filing in appeal has occurred, application for condonation of delay may be filed taking into account the above factors. Getting a favourable order from the Department is highly impossible, however, if the aggrieved person could demonstrate before the Courts that he was diligent enough in taking all steps to file the appeal within the appeal period but failed due to the exceptional circumstances and/or that his case fits into one of the categories of situations mentioned in sr. no.6) above, then hopefully he could get a favourable decision.