GST Appeal Limitation To Run From Rectification Order Where Application Filed In Time: Gujarat High Court

The Gujarat High Court has ruled that a GST appeal cannot be rejected as time-barred by calculating limitation solely from the original adjudication order when the assessee had filed a rectification application within the prescribed period and the application was subsequently decided by the adjudicating authority.

A Division Bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, “It would not be permissible to reject the appeal on the ground of limitation by computing the period from the original adjudication order when a rectification application under Section 161 of the GST Act has been filed within the prescribed period and has been duly considered and decided by the Adjudicating Authority by a reasoned order, and the appeal against such order had thereafter been filed within the prescribed period calculated from the date of the rectification order.”

The bench held that the Appellate Authority must take the rectification proceeding into account while determining limitation.

The ruling came in a batch of petitions led by Kanan International Pvt. Ltd. The petitioners challenged orders by which their appeals had been rejected on limitation.

In the lead matter, the petitioners' refund application was initially rejected on December 16, 2019. The petitioners appealed against the rejection. On October 8, 2020, the Appellate Authority allowed the appeal after finding that the refund claim had been rejected without giving the petitioners an opportunity of hearing.

After remand, the adjudicating authority again rejected the refund claim on October 3, 2022. The petitioners filed a rectification application under Section 161 on January 2, 2023, within 90 days. It was rejected on September 14, 2023.

They then filed an appeal on January 11, 2024, challenging both orders. The Appellate Authority rejected it as time-barred, calculating limitation from October 3, 2022. The petitioners contended that limitation should instead run from September 14, 2023.

The bench noted that the rectification application was filed within time and held that its filing and disposal had to be considered while determining limitation under Section 107.

It therefore could not reject the appeal by computing limitation only from October 3, 2022.

The court clarified that this did not mean an appeal could never be rejected as time-barred. If the appeal remained beyond the permissible period even when calculated from the rectification order, the Appellate Authority could still reject it.

The high court accordingly quashed and set aside the Appellate Authority's orders.

It remanded the appeals for fresh consideration on merits and directed the authority to provide the petitioners an opportunity of hearing and decide the matters within 12 weeks from receipt of the judgment.

For Petitioners: Uchit N. Sheth

For Respondents: Deepak N. Khanchandani; Parth Patel, AGP; Utkarsh R. Sharma