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GST Appeal Delay Condonation
Whether delay in making pre-deposit due to attachment of bank account, is a sufficient cause to condone the delay to entertain appeal?
Whether delay in making pre-deposit due to attachment of bank account, is a sufficient cause to condone the d…
The view taken by the learned Commissioner appears to be forcing the horse to run after tying the legs. The right of appeal which is created under statute is a substantive right of the party that cannot be denied by taking pedantic view. We are not convinced with the reasons assigned by the learned Commissioner in rejecting the appeal. Since, it is within the condonable period of limitation as the cause for the delay is suffice to entertain the appeal. On appreciation of the language employed under Section 107 (4) and in the back drop the factual and legal background, we are of the view that the impugned order deserves to be set aside.
If you are a GST dealer who has received an adverse order from the adjudicating authority, you may want to file an appeal before the Commissioner (Appeals) to challenge the order.
However, you have to file the appeal within three months from the date of communication of the order, as per Section 107 (1) of the CGST Act, 2017. You also have to pay 10% of the disputed tax as a pre-deposit, as per Section 107 (6) of the Act.
But what if you miss the deadline for filing the appeal due to some genuine reasons?
Can you still file the appeal and seek condonation of delay?
The answer is yes, but only if you can show “sufficient cause” for the delay, as per Section 107 (4) of the Act.
The Commissioner (Appeals) has the power to condone the delay up to one month beyond the statutory period of three months.However, the Commissioner (Appeals) may not always accept your reasons for delay and may reject your appeal on technical grounds.
This is what happened in the case of S A Iron And Metal vs Assistant Commissioner (ST), Andhra Pradesh High Court. The petitioner filed an appeal with a delay of 25 days due to financial crisis and freezing of bank account by the department5. The Commissioner (Appeals) rejected the appeal as not convincing and passed an order dated 03.06.2023.
The petitioner challenged this order before the High Court by filing a writ petition. The High Court set aside the order of the Commissioner (Appeals) and directed him to restore and dispose of the appeal on merits. The High Court explained the concept of “sufficient cause” and the factors to consider when deciding on condonation of delay.
The High Court relied on the Supreme Court’s decision in Collector, Land Acquisition vs Mst. Katiji, where it was held that a justice-oriented approach should be adopted while dealing with applications for condonation of delay.
The Supreme Court laid down some principles, such as:
-> A litigant does not stand to benefit by lodging an appeal late.
-> Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated.
-> Every day’s delay need not be explained in a pedantic manner. A rational common sense pragmatic approach should be applied.
-> When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred.
-> There is no presumption that delay is occasioned deliberately or on account of mala fides. A litigant does not stand to benefit by resorting to delay.
-> Each case’s circumstances must guide the decision on condoning delay.
There is no one-size-fits-all approach.
The High Court also observed that the CGST Act is a special statute and a self-contained code by itself, and its provisions should be strictly interpreted. However, this does not preclude the application of the principle of sufficient cause.
The High Court noted that the Commissioner (Appeals) did not deny freezing of bank account and issuance of notices to purchasers, which affected the petitioner’s ability to pay the pre-deposit required for filing the appeal. The High Court opined that this was a relevant fact to consider and that denying condonation would amount to forcing the horse to run after tying its legs.
The High Court emphasized that the right of appeal is a substantive right that cannot be denied by taking a pedantic view. The High Court found that the petitioner was prevented by sufficient cause from filing the appeal within time and that he filed it within the condonable period of one month.
Therefore, the High Court set aside the order of the Commissioner (Appeals) and directed him to restore and dispose of the appeal according to law.
This case illustrates how you can save your GST appeal from being rejected due to delay if you can show sufficient cause for it. You should explain your reasons for delay clearly and convincingly, and support them with evidence if possible. You should also file your appeal within one month after expiry of three months from communication of order.
You should also be aware that condonation of delay is not a matter of right but a matter of discretion vested with the Commissioner (Appeals).
Therefore, you should not take it for granted or abuse it. You should always try to file your appeal within the statutory period of three months and pay the pre-deposit of 10% of the disputed tax1.
