AUGUST 28, 2024

By Vijay Kumar

AS per Section 107 of the CGST Act, any person aggrieved by any decision or order passed by an Adjudicating Authority may appeal to the Appellate Authority within three months from the date on which the decision or order is communicated.

The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of one month.

Similarly, as per Section 112, Any person aggrieved by an order passed against him under section 107 may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated.

The Appellate Tribunal may admit an appeal within three months after the expiry of the period if it is satisfied that there was sufficient cause for not presenting it within that period.

So, the Appellate Authority can condone a delay of one month and the Tribunal can condone a delay of three months after the normal period.

In the earlier regime, the CESTAT could condone the delay without limit, but now in GST, the Tribunal cannot condone delay beyond three months after the normal period.

What happens if the appeal could not be filed within the prescribed period? Is it the end of the story for the assessee? Nothing on earth can save him. Not even the Supreme Court. In the case of Singh Enterprises, (2007-TIOL-231-SC-CX), which is widely followed in such disputes, the Supreme Court held:

The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only up to 30 days after the expiry of 60 days which is the normal period for preferring appeal. Therefore, there is complete exclusion of Section 5 of the Limitation Act.

The Supreme Court also observed,

there was no law declared by this Court that even though the Statute prescribed a particular period of limitation, this Court can direct condonation. That would render a specific provision providing for limitation rather otiose.

It will be interesting to note that in case of appeals to be filed before the High Court, there is no limit for condonation of delay. Irrespective of the length of delay, the High Court can entertain appeals if sufficient cause is shown for condonation of delay.

But is it not an anomaly when big ticket demands confirmed by the Tribunal enjoy unlimited condonation at the High Court whereas small and medium scale units' fate is sealed after three months? In fact, being hit with demands for the first time, these small units, which do not have separate personnel taking care of legal matters, take some time to find out the next course of action and to join the appeal stream. Unfortunately, many assessees are not aware of the seriousness of limitation and by the time they realise, the valuable three months' time would expire, and they are stuck with the demands having no forum to fight their case on merits. There are many assessees who have made the pre-deposits but failed to file appeals.

Why can't the Appellate Authority and Tribunal also be allowed to condone the delay without any limit, as in the case of High Courts? As Supreme Court observed (2010-TIOL-46-SC-LMT), "After all, justice can be done only when the matter is fought on merits and in accordance with law rather than to dispose it of on such technicalities and that too at the threshold".

In this scenario, there is an order from the Madras High Court which has allowed condonation of delay beyond the specified period.

The petitioner submitted:

- Due to ambiguity in the procedure adopted after the GST enactment, he failed to note the show cause notice dated 19.12.2022 issued by the GST Officer showing some discrepancies in GSTR returns.

- Subsequent thereto, the impugned demand order came to be issued on 08.02.2023 by the officer.

- The petitioner came to know of the demand order only after the Department initiated coercive steps to recover the demand amount and immediately thereafter, the petitioner filed an appeal before the appellate authority, however, with a delay of 285 days.

- The appeal was dismissed on the ground of delay.

- The delay is neither wilful nor wanton but due to bona fide reasons and hence, prays for quashing of the impugned orders of the original and appellate authority.

The Department fairly submitted that if the Court finds sufficient and reasonable cause for the delay, appropriate orders may be passed.

Considering the submissions of the counsel for the petitioner and the Government and considering the fact that the notices were uploaded in the portal, but no hard copy was served on the petitioner, the Court felt that reasonable cause has been shown by the petitioner for the delay. Therefore, the Court was inclined to condone the delay of 285 days in filing the appeal. (2024-TIOL-1421-HC-MAD-GST)

The High Court passed the following order:

1. Accordingly, the writ petition is allowed.

2. The delay of 285 days in filing the appeal before the first respondent is condoned and the order of the appellate authority/first respondent is set aside.

3. The first respondent is hereby directed to take up the appeal as if it is filed in time and dispose of the same on merits and in accordance with law, after affording an opportunity of hearing to the petitioner.

When High Courts and Supreme Court can condone delay without limit, why can't the Tribunal and appellate authorities be given the same powers?

In a case before a High Court, I had vociferously argued against a condonation of delay application filed by the Revenue. The very next day, I was before the same bench pleading pathetically for allowing my condonation of delay application. The Bench observed, "yesterday, you were so loud and today you are so soft." I prayed for the same kind of relief given to Revenue and I won on the second day, having lost on the first day. Revenue got its condonation and so did I. But why did I oppose the condonation of delay for the government? This is the story.

I had won the case in the Tribunal, but the Assistant Commissioner who was to give refund, refused to give the refund and passed an order explaining why he need not obey the orders of the Tribunal. Against this speaking order, I filed a writ in the High Court, wherein, I argued that the order of the Tribunal had attained finality as the Revenue had not appealed against that order and so was binding. Thereupon, the Revenue woke up and filed an appeal. I submitted that the appeal was filed beyond the period of limitation and so could not be admitted. Thereafter, they filed a condonation of delay, which I strongly objected, in the peculiar circumstances. The High Court Bench told me,” If we don't allow their application for condonation, they will go to the Supreme Court - and you will be doing a great disservice to your client; let's decide the matter on merits, instead of limitation." And so, the department's application for condonation was allowed. If you want to know what happened to the case finally, please see - 2017-TIOL-2165-HC-AP-CUS

The Government approaches the High Courts and Supreme Court with strange reasons and situations to condone the delay in filing appeals. After all, they are government, and they have too many difficulties in filing appeals and every officer responsible for filing the appeal believes that the government has a special right in getting condonation of delay - as it is the right of the government to delay.

To condone, or not to condone

In the famous case of Collector, Land Acquisition Anantnag - 2002-TIOL-444-SC-LMT, the Supreme Court started its judgement with the words, "To condone, or not to condone, is not the only question. Whether or not to apply the same standard in applying the "sufficient cause" test to all the litigants regardless of their personality in the said context is another."

The Supreme Court observed that: -

A liberal approach is adopted on principle as it is realized that:

1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

3. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

4. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

5. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

In a recent case, S.L.P. (Civil) No. 21096 of 2019, the Supreme Court was dealing with a delay of 12 years and 158 days on the part of Union of India. The Attorney General for India vehemently submitted that he has a very good case on merits and considering the merits alone, the delay of 12 years and 158 days deserves to be condoned. The Supreme Court observed,

It would be a mockery of justice if we condone the delay of 12 years and 158 days and once again ask the respondent to undergo the rigmarole of the legal proceedings.

Until next week