The Madhya Pradesh High Court, in a recent and significant decision in Laxmi Motors Vs State of M.P. And Others (Writ Petition No. 35184 of 2025, order dated 15th October 2025), has clarified the correct method for computing the statutory limitation period for filing appeals under the Central Goods and Services Tax Act, 2017 (CGST Act). In addition, the Court directed the State to bear the litigation cost of ₹25,000, which may be recovered from the delinquent official if the department so chooses, thereby ensuring that public funds are not used to cover errors committed by government personnel.
The petition was filed to challenge the order dated 13th August 2025, passed by the Appellate Authority and the Joint Commissioner, State Taxes, Satna Division, which dismissed the appeal filed by Laxmi Motors against the order dated 26th July 2024. The appeal, filed on 25th November 2024, had been declared barred by limitation by the Appellate Authority.
The petitioner contended that, in accordance with the Supreme Court’s judgment in State of Himachal Pradesh & Another Vs. Himachal Techno Engineers & Another (2010) 12 SCC 210, the computation of the limitation period must follow the provisions of Section 9 of the General Clauses Act, 1897. Accordingly, the day on which the original order was passed, 26th July 2024, should be excluded, and the limitation period should commence from 27th July 2024.
Further, the petitioner submitted that Section 107(1) of the CGST Act, 2017 provides a limitation period of three months, not 90 days. Therefore, the three-month period would expire on 27th October 2024. Under Section 107(4), the Appellate Authority is granted a further one-month grace period to entertain the appeal beyond the initial limitation. Applying this provision, the extended deadline would end on 26th November 2024. Since the appeal was filed on 25th November 2024, it was clearly within the permissible period. The petitioner emphasized that the Appellate Authority overlooked this correct computation of limitation.
Issue Before the Court
Whether the appeal filed by Laxmi Motors on 25th November 2024 against the penalty order dated 26th July 2024 could be considered barred by limitation, given the provisions of Section 107(1) and Section 107(4) of the CGST Act, 2017, and the rules for computing time under Section 9 of the General Clauses Act, 1897, along with relevant judicial precedents.
Judgment and Directions
The Madhya Pradesh High Court set aside the impugned order dated 13th August 2025, allowed the writ petition, and directed the Appellate Authority to decide the appeal on its merits. Additionally, the Court ordered the State to bear the litigation cost of ₹25,000, which is recoverable from the delinquent official, thereby ensuring that public funds are not used to cover errors committed by government personnel.
Court’s Observations
The Court observed that, under Section 9 of the General Clauses Act, 1897, whenever a Central Act uses the word “from” to indicate the commencement of a period, the first day of the period must be excluded. Consequently, the three-month limitation period under Section 107(1) of the CGST Act should be calculated from the day following the date of the order, rather than the day of the order itself. In the present case, this means that the three-month period commenced on 27th July 2024, the day after the original order was passed.
The Hon’ble Supreme Court in State of Himachal Pradesh & Another Vs. Himachal Techno Engineers & Another (2010) 12 SCC 210) referred to Section 3(35) of the General Clauses Act, 1897, defining a “month” as a period reckoned according to the British Calendar.
Further, the Court noted the principles established in Dodds Vs. Walker (1981) 1 WLR 1027; (1981) 2 ALL ER 609, House of Lords, which held that when calculating a period of months or a specified number of months after a particular event, the period ends on the corresponding date in the subsequent month, irrespective of whether some months are longer than others.
The Supreme Court also reaffirmed this rule in Bibi Salma Khatoon v. State of Bihar [(2001) 7 SCC 197], confirming the method for calculating monthly periods in legal proceedings.
Thus, it is clear that the period of limitation commenced on 27th July 2024. Applying the Supreme Court’s ruling in Bibi Salma Khatoon v. State of Bihar [(2001) 7 SCC 197] and the House of Lords’ decision in Dodds Vs. Walker (1981), the three-month period expired on 27th October 2024.
Further, under Section 107(4) of the CGST Act, 2017, a one-month grace period is allowed, which would have ended on 26th November 2024. Since the appeal was filed on 25th November 2024, it clearly falls within the permissible period and cannot be deemed barred by limitation.
Accordingly, the Madhya Pradesh High Court held that the impugned order dated 13th August 2025 , which failed to consider the provisions of Section 107(1) and Section 107(4) of the CGST Act, as well as the legal principles laid down by the Hon’ble Supreme Court in Himachal Techno Engineers (supra), was not sustainable in law. The Court set aside the impugned order, allowed the writ petition, and disposed of the case.
Conclusion
The Madhya Pradesh High Court’s ruling in Laxmi Motors Vs State of M.P. And Others clarifies the correct method for computing limitation periods under the CGST Act, 2017, emphasizing the exclusion of the first day, calculation of months using the corresponding date rule, and the one-month grace period under Section 107(4). By setting aside the Appellate Authority’s order, the Court ensured that technical miscalculations do not deprive taxpayers of their statutory rights and reinforced accountability by directing the recovery of litigation costs from the delinquent official rather than public funds.
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