JUNE 07, 2023

By Vijay Kumar

WHAT is a GST Month?

As per Section 117 of the CGST Act, an appeal to the High Court has to be filed within a period of one hundred and eighty days from the date on which the order appealed against is received by the aggrieved person.

As per Section 107, an appeal to the Appellate Authority has to be filed within three months from the date on which the decision or order is communicated. 

Why 'one hundred and eighty days' for High Court and 'three months' for Appellate Authority? Is one hundred and eighty days equal to six months and three months  equal to 90 days? Not exactly!

An order was received on 10.11.2021 and an appeal against the said order was filed on 29.09.2022 (there was a covid-19 exclusion, which was promptly dismissed by the GST Appellate Authority. The prescribed period of limitation is three months from the date of communication of order and condonable period is a further period of one month. It is, therefore, to be noted that the unit of limitation qua prescribed period and condonable period have been set out in months and not in days.

The matter reached the Madras High Court which observed, (W.P.No.32877 of 2022 - Hemasri Enterprises) - 2023-TIOL-631-HC-MAD-GST

In this view of the matter, the dates would have to be computed by applying the time-honoured Dodds Vs. Walker i.e., the last date of succeeding English calendar month.

What is Dodds Vs. Walker ?

A landlord served his notice to determine the tenancy on the last day of a 30-day month. The tenant served his counternotice on the 31st day of the month four months later.

Dismissing the tenant's appeal, in a famous 1981 judgment, the English Supreme Court found that the court had no jurisdiction to hear the tenant's application; he was one day late. The Court held, "When a notice was required to be given within a certain number of months, the period expired on the same day as the original notice."

In a Service Tax case in The Ahmednagar Merchants Co-Op Bank Ltd Vs Commissioner of Central Excise & Customs, Aurangabad - 2014-TIOL-1635-CESTAT-MUM, the CESTAT observed,

Vide the impugned order, the lower appellate authority has dismissed the appeal as time-barred on the ground that the appeal was filed on 17/02/2014 in respect of an adjudication order received on 18/11/2013 and, therefore, the appeal has been filed after the expiry of 91 days from the date of communication of the order.

The short question for consideration is whether the appeal has been filed in time or not. As per Section 85 (3A) of the Finance At, 1994, an appeal shall be presented within two months from the date of receipt of the decision or order and if the appellant is prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, the appellate authority can condone the delay and allow the appeal to be presented within a further period of one month. Thus, the total time period of 3 months is available to the appellant to file the appeal.

Since the appellant received order on 18/11/2013, the period of two months for filing the appeal expired on 18/01/2014 and the condonable grace period expired on 18/02/2014. In the present case, the appeal has been filed on 17/02/2014.

The General Clauses Act defines a month as a British Calendar month and it is not defined in terms of number of days. Therefore, in the present case, the appeal has been filed in time i.e. within the condonable period. Therefore, the period is not beyond the condonable period and the appellate authority should have condoned the delay.

A Special Bench of the ITAT was called upon to decide an identical issue. The issue referred to the Special Bench was,

"Whether for the purpose of Section 54EC of IT Act, 1961, the period of investment of six months should be reckoned after the date of transfer or from the end of the month in which transfer of capital asset took place?"

The ITAT Special Bench found that the term 'month' is not defined in the Income Tax Act. So, they examined the term "month" as per General Clauses Act, 1897 which says-

"Section 3 (35): "month" shall mean a month reckoned according to the British calendar".

The Tribunal wisely observed, 2014-TIOL-156-ITAT-AHM-SB

In British Calendar, a month is a unit of period used in a Calendar. It may not be out of context to mention that this system was invented by Mesopotamia. An average length of a month is 29.53 days; but in a calendar year there are 7 months with 31 days, 4 months having 30 days and one month has 28/29 days. It can be possible that under common parlance probably it meant a lunar month but in calculating the specified number of months that had elapsed after occurrence of a specified event then a General Rule is that the period of a month ends on the last day. Therefore, a month ends by the last date of that month.

The Tribunal after scrutinising a few sections of the Act found that on some occasion the Legislature had not used the term "Month" but used the number of days to prescribe a specific period. For example, in Section 254(2A) First Proviso it is prescribed that the Tribunal may pass an order granting stay but for a period not exceeding one hundred and eighty days. The Tribunal noted, "This is an important distinction made in this statute while subscribing the limitation/ period. This distinction thus resolves the present controversy by itself.

The Special Bench of the ITAT concluded that in the absence of any definition of the word 'month' in the Act, the definition of General Clauses Act 1897 shall be applicable. The Tribunal clarified that it was neither a liberal nor a literal interpretation of the Statute but it is a matter of "purposive construction of statute or "constructive interpretation of statute".

In Ashok Kumar Tiwari - 2014-TIOL-500-CESTAT-DEL, the CESTAT observed,

The very issue was specifically considered in Tamal Lahiri i.e. whether "month" occurring in the Bengal Municipal Act (15 of 1932) meant 30 days and not a calendar month.

The Supreme Court adverted to an argument that six months must be considered as 180 days and not as calendar months and observed that High Court did not accept that submission. The Supreme Court then proceeded to hold the High Court was right, since the relevant provisions of Section 533 (corresponding to Section 3(23) of the General Clause Act, 1987), defines a month as according to the British calendar. The Supreme Court ruled that the expression "six months" which occurs in Section 533 must be calendar months and not 180 days. The judgement in Tamal Lahiri is conclusive authority for the principle that a "month" as defined in Section 3(35) of the General Clause Act is a calendar month and not 30 days.

Aggrieved by this order, the Commissioner appealed to the Allahabad High Court. The Bench headed by the then Chief Justice of the High Court Justice Dr D Y Chandrachud observed, 2014-TIOL-2554-HC-ALL-CX

Significantly, where the legislature intends to define the period of limitation with regard to the number of days, it does so specifically. In the case of the Act of 1994, Section 85 has defined the period of limitation as well as the power to condone the delay with regard to a stipulation in terms of months and such a stipulation can only mean a calendar month. Once the legislature has used the expression "three months" both in the substantive part of sub-section (3) of Section 85 as well as in its proviso, it would not be open for the Court to substitute the words "three months" by the words "ninety days". To do so, would amount to rewriting the legislative provision, which is impermissible.

In The Ahmednagar Merchants Co-op Bank Ltd - 2014-TIOL-1635-CESTAT-MUM, the CESTAT observed,

The General Clauses Act defines a month as a British Calendar month and it is not defined in terms of number of days.

Let's go back to the General Clauses Act, 1897 before we say adieu-

"Section 3 (35): "month" shall mean a month reckoned according to the British calendar".

Has the word 'reckoned' any special meaning here?

The Ahmedabad Bench of the Income Tax Appellate Tribunal in ITA No.1955 to 1965/Ahd/2015 observed,

"A month as per the British calendar" and "a month reckoned (emphasis supplied by me) as per British calendar" are not the same thing and cannot be used interchangeably. While former refers to a calendar month by itself, the latter refers to a period of time which qualified to be treated as a 'month'. The subtle distinction between the scope of these two expressions cannot be ignored.

In the end, the lesson is clear: time is a fickle friend, capable of confounding even the most astute legal minds. So, the next time you find yourself in a race against the clock in the GST realm, remember that months are measured, and time will play its tricks and let the GST Month guide you on your whimsical journey.

But you know in GST, a month is a unit of time defined by deadlines, compliance, and confusion.

Until Next week