Exclusion of Rectification Period from Appeal Limitation under GST: Relief by Punjab & Haryana High Court
The Punjab and Haryana High Court, in a recent and significant decision in Arvind Fashion Limited vs. State of Haryana & Others, CWP No. 16286 of 2025 (Order dated September 26, 2025), has clarified that the period spent pursuing a bona fide rectification application under Section 161 of the CGST Act shall be excluded while computing the limitation period for filing an appeal under Section 107.
This decision offers welcome procedural clarity and relief to taxpayers, recognizing that genuine pursuit of rectification cannot deprive an assessee of its right to appeal.
Arvind Fashion Limited (“the Petitioner”) filed the present writ petition before the Hon’ble Punjab and Haryana High Court challenging the order-in-appeal dated February 6, 2025, passed by the Joint Commissioner of State Tax (Appeals)-cum-Appellate Authority, Gurugram, Haryana. The impugned order had dismissed the Petitioner’s appeal filed under Section 107 of the Haryana Goods and Services Tax Act, 2017 read with the Central Goods and Services Tax Act, 2017 (“HGST/CGST Act”) on the ground of limitation. The Appellate Authority held the appeal to be time-barred by 109 days and declined to condone the delay.
The Petitioner submitted that it had filed a rectification application dated August 22, 2024, under Section 161 of the HGST/CGST Act, as the order dated July 15, 2024, passed under Section 73 in Form DRC-07, was allegedly vitiated by patent errors and mistakes apparent on record. However, the said rectification application was rejected on January 28, 2025, purportedly without issuance of any notice, without affording an opportunity of personal hearing, and without due consideration of the material facts and submissions.
Immediately thereafter, the Petitioner, without any delay, filed an appeal on January 29, 2025, challenging both the order-in-original dated July 15, 2024, as well as the rejection of its rectification application dated January 28, 2025. The Petitioner contended that the period spent bona fide pursuing rectification proceedings ought to have been excluded while computing the limitation for filing appeal under Section 107.
Issue Before the Court
Whether the time spent awaiting decision on a bona fide rectification application under Section 161 of the CGST Act should be excluded while calculating the limitation period for filing appeal under Section 107, and whether the appellate authority erred in dismissing the appeal as time-barred.
Judgment and Directions
The Hon’ble High Court set aside the appellate order dismissing the appeal as time-barred and remanded the matter for adjudication on merits. The Court directed that the period spent in rectification proceedings be excluded for the purpose of computing delay in filing the appeal.
Court’s Observations
The Hon’ble Court observed that the rectification application had been filed well within the period of limitation, and the appeal under Section 107 of the HGST/CGST Act was filed within two days of the passing of the order dated January 28, 2025, whereby the rectification request was dismissed. The Appellate Authority, in its order dated February 6, 2025, had nonetheless dismissed the appeal as time-barred, holding that it was filed 109 days beyond the prescribed limitation period of three months. The Authority computed limitation from the date of the original order dated July 15, 2024, and thus concluded that the appeal filed on January 30, 2025, was delayed by 109 days.
In assessing these facts, the Court held that when the Petitioner was admittedly awaiting a decision on its rectification application, no delay could be attributed to the filing of the appeal. The Court found no merit in the Respondent’s contention that the Petitioner should have filed an appeal simultaneously with the rectification application. Such an approach, the Court remarked, would lead to an anomalous situation, because, had the rectification been allowed, the need for an appeal would not have arisen at all.
The Court further noted that in such circumstances, the rectification order, if made, would have merged with the original assessment order, thereby resolving the dispute without recourse to appellate proceedings. Accordingly, the Court clarified that in cases where an assessee bona fide awaits the outcome of rectification proceedings, it cannot be presumed that the limitation period for appeal begins from the date of the original order. Instead, the period spent during the pendency of the rectification application must be excluded for the purpose of computing limitation.
At this juncture, the Hon’ble Court reiterated that the Petitioner had acted with due diligence and bona fides throughout the proceedings. The rectification application was filed well within the statutory period of three months, and the appeal under Section 107, accompanied by the mandatory pre-deposit of 10% of the disputed tax, was filed immediately after the passing of the rectification rejection order dated January 28, 2025.
The Court noted that the Respondents had neither pleaded nor demonstrated any ulterior motive or delay attributable to the Petitioner in filing or pursuing the rectification application. In such circumstances, the Court held that the impugned appellate order dated February 6, 2025, was unsustainable in law, as the period spent bona fide pursuing the rectification application ought to have been excluded while computing the limitation for filing appeal.
Conclusion-
In my opinion, the Arvind Fashion Limited judgment is a fair and forward-looking decision. The Court has rightly understood that the remedies of rectification and appeal under the CGST Act should work together, not against each other. By allowing the exclusion of time spent on a genuine rectification application while calculating the appeal period, the Court has made sure that honest taxpayers are not punished for following the proper process.
Author Bio
