GST Appeals: Method of Counting Delay

The GST Flyers published through the web site of Central Board of Indirect Taxes & Customs (CBIC) say that, tax laws (or any laws, for that matter) impose obligations. Such obligations are broadly of two kinds: tax-related and procedure-related. The taxpayer’s compliance with these obligations is verified by the tax officer, as a result of which sometimes there are situations of actual or perceived non-compliance. If the difference in views persists, it results into a dispute, which is then required to be resolved. Tax law recognizes that on any given set of facts and laws, there can be different opinions or viewpoints. Hence, it is likely that the taxpayer may not agree with the “adjudication order” so passed by the tax officer. It is equally possible that the Department may itself not be in agreement with the adjudication order in some cases. It is for this reason that the statute provides further channels of appeal, to both sides. However, since the right to appeal is a statutory right, the statute also places reasonable fetters on the exercise of that. The time limits prescribed by the statute for filing of appeals is an example of such fetters on the statutory right. 

Limitation in filing appeals – Relevant Statutory Provisions 

As per Section 107(1) of the Central Goods & Services Tax Act, 2017 & State Goods & Services Tax Act, 2017 (hereinafter collectively referred to as the “GST Acts”), the first appeal prefers against an original adjudication order or decision shall be filed before the Appellate Authority within three months from the date on which the said decision or order is communicated to such person. As also as per Section 107(2) of the GST Acts, the GST Department can also file an application/appeal against any decision or order, if aggrieved, within six months from the date of communication of the said decision or order. Further, it is prescribed U/s. 107(4) that the Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

In cases where, an order passed by the first Appellate Authority is not satisfactory to the appellant, he (either the taxable person or the GST Department whoever it may be) can file a second appeal before the Appellate Tribunal. Thus, by virtue of Section 112(1) of the GST Acts, such second appeal preferred by a taxable person shall be filed before the Appellate Tribunal within three months from the date on which the said decision or order is communicated to such person. As per Section 112(3) of the GST Acts, the GST Department can also file an appeal against any decision or order, if aggrieved, within six months from the date of communication of the said decision or order. Further, it is prescribed U/s. 112 (6) that the Appellate Tribunal has power to condone delay for three months. Before the Tribunal, opposite parties are permitted to file cross objections within forty-five days of the of date of receipt of notice [Section 112(5)]. In this case also statute permits delay condonation for a further period of forty-five days [Section 112(6)].

(Notes: The National or State Level Appellate Tribunals are not constituted yet. Therefore, as per Order No. 09 /2019-Central Tax/dated: 03.12.2019 (SO 4340 [E]), second appeals can be filed within three months or six months, as the case may be, from the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution U/s. 109, enters office)

Moreover, Section 117 of the GST Acts provides for filing of appeal against the orders of the Appellate Tribunal before the jurisdictional high court within one hundred and eighty days from the date of communication of the appealable order. Here the term used is “one hundred and eighty days” but not “six months”. Moreover, conspicuously, herein there is no mention of any further period for which delay can be condoned, which means that it is the discretion of the High Court to condone the delay whatever period of delay is involved on sufficient reason.

Method of counting delay in filing appeals

Usually, in the GST scenario, the date of communication of an adjudication order is the date of GST FORM DRC-07 in cases where the same is generated in to the GST Portal. In cases where an adjudication order is received physically by a taxable person, the actual date of receipt of the same has to be reckoned as the date of communication of order. The period of limitation for filing of first/second appeals are concerned, it is worth to note that “three months” or “six months” is prescribed instead of 90 days or 180 days. Then the distinction between the period prescribed in month/months or days has to be understood

thoroughly. In this regard, for a better understanding of the situation, principles laid down through various judicial rulings can be relied on.   The Hon’ble Supreme Court in   State Of H.P.& Anr Vs M/S Himachal Techno Engineers & Anr (2010) 12 SCC 210 wherein the delay condonation petition rejected under Arbitration and Conciliation Act, 1996 was in dispute. Therein. the following questions were arise for the Hon’ble Court’s consideration:

(i) What is the date of commencement of limitation?

(ii) Whether the period of three months can be counted as 90 days?

Herein, it is found by the apex court that the finding of the High Court below that `three months’ mentioned in section 34(3) of the Arbitration and Conciliation Act refers to a period of 90 days is erroneous. A `month’ does not refer to a period of thirty days, but refers to the actual period of a calendar month. If the month is April, June, September or November, the period of the month will be thirty days. If the month is January, March, May, July, August, October or December, the period of the month will be thirty-one days. If the month is February, the period will be twenty-nine days or twenty-eight days depending upon whether it is a leap year or not. Section 3(35) of the General Clauses Act, 1897 defines a month as meaning a month reckoned according to the British calendar. In Dodds Vs. Walker – (1981) 2 All ER 609, the House of Lords held that in calculating the period of a month or a specified number of months that had elapsed after the occurrence of a specified event, such as the giving of a notice, the general rule is that the period ends on the corresponding date in the appropriate subsequent month irrespective of whether some months are longer than others. This is widely known as Dodds Vs. Walker principle.

The decision of the Hon’ble Supreme Court in Bibi Salma Khatoon v. State of Bihar – (2001) 7 SCC 197 is also on the above lines. Therefore, when the period prescribed is three months (as contrasted from 90 days) from a specified date, the said period would expire in the third month on the date corresponding to the date upon which the period starts. As a result, depending upon the months, it may mean 90 days or 91 days or 92 days or 89 days. The Hon’ble High Court of Delhi in Union of India vs M/S Rama Contractor & Anr, “OMP(COMM.) No. 255/2021/dated:13.09.2021 has relied on and followed the principles laid down through State Of H.P.& Anr Vs M/S Himachal Techno Engineers & Anr to resolve the issue of period of delay involved.

Coming to the GST scenario  where, a taxable person/assessee receives an adjudication order from a proper officer functioning under the GST Act, say,  on 15.09.2022, for the purpose of calculating the three months period, the said date (15.09.2022) shall have to be excluded having regard to Section 12(1) of Limitation Act, 1963 and Section 9 of General Clauses Act, 1897. Consequently, the three months should be calculated from 16.09.2022 and would expire on 15.12.2022. Accordingly, further period of condonable delay for one month ends on 15.01.2023. In contrast 90 days of limitation in the present case would ends on 14.12.2022.

Recently, the Hon’ble High Court of Madras in Hemasri Enterprises Vs. the Appellate Authority, W.P.No.32877 of 2022 dated: 07.12.2022 followed the above principle (Dodds Vs. Walker princile) in a case where appeal filed U/s. 107 of the GST Acts was dismissed by the Appellate Authority as barred by limitation.

Limitation applicable where the “time limit” for filing an appeal falls on a holiday

The Hon’ble Supreme Court in Sagufa Ahmed Vs. Upper Assam Plywood Products Pvt. Ltd.,  in Civil Appeal No. 3007 3008 of 2020 /dated: 18.09.2020 (in connection with appeals before the National Company Law Appellate Tribunal (NCLAT), U/s.61 of the Insolvency and Bankruptcy Code, 2016) has recognized a distinction in law, between the “period of limitation”, i.e. the “time period” (“prescribed period”) and the “further period” of time (“extended period”) , upto which delay can be condoned. Interpreting Section 10 of the General Clauses Act 1897 and Section 4 of the Limitation Act, 1963, which deal with the methodology for computing limitation in cases where the last day falls on a day when the court is closed, held that the principle of sections 4 and 10 deal with the “period of limitation”, i.e. the “time period/prescribed period” within which appeals should be filed and not with the “further period/extended period”. Thus, the Hon’ble Court held that where the last day of the “time period” prescribed under the Act falls on a holiday, the next working day may be construed as the last day of the “time period” within which such appeal should be filed. In other words, in the context of the GST Acts, where the last day for filing an appeal falls on a holiday, the next working day would be construed as last day for filing the appeal and as such no application for condonation of delay needs to be filed. Decision of the apex court in State of Rajasthan Vs. Harphool Singh 2000 5 SCC 652 is also in support of this principle.

[Notes: The judgments granting exclusion of holiday from the “prescribed time” in the light of the provisions under the General Clauses Act 1897 and the Limitation Act, 1963, are in essence relating to filing of appeals in physical forms. It is doubtful in relying on the same principle where appeals filed on electronic mode]

Limitation applicable where the “further period” falls on a holiday

In the light of the distinction between the “time period” prescribed under the Acts and the “further period/extended period” within which delay can be condoned, the Hon’ble Supreme Court in Sagufa Ahmed (supra) held that the benefit of section 4 of the Limitation Act and section 10 of the General Clauses Act, would only be applicable to the last day of the “time period/prescribed period” falling on a holiday and not the last day of the “further period/extended period” falling on a holiday. Consequently, if the last day of the further period falls on a holiday, it will not deem the next working day as the last day of the “further period”.

Here, the Hon’ble Supreme Court followed its earlier decision in Assam Urban Water Supply Board v Subash Projects and Marketing Ltd, (2012) 2 SCC 624, wherein, it is held that Section 10 of the General Clauses Act would not apply to the additional 30-day period, prescribed for condonation of delay, in section 34 of the Arbitration and Conciliation Act, 1996. Therefore, for filing an appeal U/s. 107 the benefit of holiday is available for the first three months’ period but not available for the further period of “one month”

The general principles laid down above are equally applicable for the application for revocation of cancellation of registration (U/s. 30 of the GST Acts, total 90 days’ period is allowed), application for refund (U/s. 54(1), within 2 years), issue of refund order by the officer (within 60 days U/s. 54(7)), appeals to the Appellate Authority for Advance Ruling (U/s. 100, such appeals have to be filed within 30 days or within a further period of 30 days) etc.

Summery

• In calculating the period of a month or a specified number of months for filing an appeal under the GST Acts, the general rule is that the period ends on the corresponding date in the appropriate subsequent month. In case where an adjudication order is received on 15.09.2022, the three months’ period should be calculated from 16.09.2022 and would expire on 15.12.2022. Accordingly, further period of condonable delay for one month expires on 15.01.2023.
• In contrast, in cases where if 90 days of limitation is reckoned from 15.09.2022 it would end on 14.12.2022 [Here actual days are reckoned]. Where an order is communicated on 20.12.2022 the period of 90 days ends on 20.03.2023. Thus wherever days are prescribed instead of months (Eg- Cross objections to be filed before the Tribunal, Appeal to the High Court etc) this principle has to be followed.
• Where, the last day of the “prescribed period” under the Act falls on a holiday, the next working day may be construed as the last day of the “prescribed period” within which such appeal should be filed. For example, where an assessee received an adjudication order on 11.11.2022 and as such the three months’ period ends on 11.02.2023 (11.02.2023 is second Saturday and 12.02.2023 is Sunday) the appeal can be filed on 13.02.2023 without delay. However, this benefit is not available for ‘further period’ of one-month U/s. 107(4). As such in the instant example the appeal can be filed on or before 13.02.2023 without delay and can be filed on or before 11.03.2023 with one-month delay (even if 11.03.2023 & 12.03.2023 are holidays, benefit of holiday is not available). 

Author/Blogger:  Aji V. Dev, Advocate, High Court of Kerala at Aji V. Dev & Associates, Ernakulam, Kochi, available at ajivdev@yahoo.co.in/advajivdev@gmail.com/9447788404.