The Gujarat High Court recently set aside an appellate order rejecting a GST appeal solely on the ground of a 13-day delay, holding that the appellate authority had failed to exercise its discretion under the law despite having the power to condone the delay.
A bench of Justice A.S. Supehia and Justice Pranav Trivedi held that the delay fell within the additional 30-day condonable period available beyond the 90-day statutory limitation under Section 107(4) of the Central Goods and Services Tax Act, 2017.
Emphasising that appellate authorities are required to examine whether sufficient cause has been shown, the Court said:
“We are of the opinion that the appellate authorities should have applied the mind to the reasons assigned for delay, as it had the discretion to condone the delay within the period of 90 days over and above 30 days, if the appeal is filed within additional 30 day.”
The plea arose from a GST demand of Rs 8.12 lakh raised against tRP Chemicals, a Gujarat-based manufacturer, for the period between July 2017 and March 2020, relating to the reversal of Input Tax Credit on post-supply discounts. During audit proceedings, the taxpayer had accepted six audit objections and paid the differential tax, interest, and penalty, disputing only the objection concerning ITC reversal under Section 15(3) of the CGST Act.
It submitted that the post-supply discounts were received without GST in line with Section 34 of the Act, and that it had placed these details on record in its reply to the show cause notice. Even so, a demand order was passed in January 2024.
Explaining the delay in filing the appeal, the manufacturer told the Court that the demand order had been sent by post to factory premises that had already been sold and closed, resulting in non-service and return of the order.
The petitioner said it became aware of the order only after being informed telephonically by the GST Department, following which its accountant collected the order manually.
Although the appeal was filed within the condonable period, the appellate authority rejected it solely on the ground of limitation.
The Department opposed the writ petition. It said the closure of business could not explain the delay and argued that the petitioner should have tracked the order on the GST portal. It also objected to the appeal being filed manually.
The High Court was not persuaded. It said the delay stemmed from the closure and sale of the factory, which meant the order was never served. The Court also faulted the appellate authority for refusing to even consider a manually filed appeal, despite having the power to condone the delay.
The appellate order was therefore set aside, and the matter was sent back for fresh consideration on merits.
For Appellant: Advocate Hardik V. Vora
For Respondent: Senior Standing Counsel Ms. Hetvi H. Sancheti