GST Appellate Authority Cannot Invoke Limitation Act To Condone Delay Beyond One Month: Rajasthan High Court

The Rajasthan High Court has recently held that a GST appellate authority cannot condone delay beyond one additional month after the expiry of the three-month statutory period for filing an appeal, even if sufficient cause is shown.

Setting out the law, the court ruled that Section 107(4) of the Central Goods and Services Tax Act, 2017, permits the Appellate Authority to condone delay only up to one month and that it can't take recourse to Section 5 of the Limitation Act to extend that period further.

A Division Bench of Justices Arun Monga and Yogendra Kumar Purohit drew a distinction between the limited jurisdiction of statutory authorities and the plenary powers of constitutional courts.

While the High Court may, in appropriate cases, condone delay in the exercise of its jurisdiction under Article 226 of the Constitution, such discretion cannot be stretched into the statutory framework governing the Appellate Authority.

“This statutory cap is absolute and admits of no elasticity in the hands of the appellate authority. If the legislative intent were to vest the Appellate Authority with an open-ended discretion to condone delay by importing the Limitation Act, the express ceiling of one month would be rendered otiose. Such an interpretation would amount to rewriting the statute and defeating the clear mandate of Parliament," the court said.

The court emphasised that the Appellate Authority under the CGST Act is a creature of statute, deriving both its power and its limits from Section 107. Once the additional one-month period expires,it lacks juisdiction to entertain any appeal.

The order comes from a challenge to the rejection of an appeal filed with a delay of about 160 days against the cancellation of the petitioner's GST registration.

The petitioner, a trading firm, was aggrieved by the cancellation of its GST registration after it failed to file returns for six consecutive months.

The Appellate Authority rejected the appeal as time-barred, as it was filed beyond both the three-month limitation period and the additional one-month window available for condonation under Section 107(4). This led the petitioner to approach the High Court.

Before the Court, the petitioner explained that the delay occured on account of lapses on the part of itsaccountant,t who wasentrustedd with all GST-related compliances, and it was under the bona fide belief that the necessary filings were made.

The petitioner contended that rejection of the appeal solely on limitation effectively deprived it of the ability to carry on business.

During the hearing, reliance was placed on a Calcutta High Court decision in S.K. Chakraborty & Sons v. Union of India, which had taken the view that even a GST Appellate Authority could condone delay by invoking the Limitation Act.

However, the High Court, here, expressly declined to follow that view, holding that Section 107 constitutes a self-contained limitation framework and excludes the application of the Limitation Act by necessary implication.

It also noted that cancellation of GST registration or denial of appellate remedies can, in appropriate cases, have disproportionate consequences by impairing a taxpayer's ability to conduct business and earn a livelihood.

In such cases, constitutional courts can step in to prevent manifest injustice. Applying this principle, the court accepted the petitioner's explanation for the delay as bona fide. Exercising its inherent powers under Article 226, it condoned the 160-day delay, set aside the appellate order. The matter was back to the Appellate Authority for a decision on merits in accordance with law.