MARCH 12, 2025

By Vijay Kumar

NO question is too trivial or insignificant in GST law. Recently, the Kerala High Court had to tackle the age-old question: What is a month? For the petitioner assessee, it made eons of difference.

The petitioner approached the High Court aggrieved that an appeal filed by it has been rejected by the Appellate Authority on the ground that it was barred by limitation under Section 107 of the Central Goods and Services Tax Act, 2017.

The petitioner submitted:

1. The order in original was served on it on 06-07-2023.

2. The appeal against the above order was filed before the Appellate Authority on 06-11-2023. (123 days)

3. Under Section 107 of the CGST Act, a period of three months is available for filing an appeal, and it can be filed within a further period of one month with an application for condonation of delay. (Total - Four Months)

4. The Appellate Authority proceeded on the basis that the term 'month' in Section 107 of the CGST Act referred to a period of 30 days in which event the appeal filed on 06-11-2023 was not maintainable.

So, what is a month?

Former Union Minister Ghulam Nabhi Azad once said, "One month does not mean one month or 30 days. Tomorrow sometimes does not mean tomorrow morning. One week does not mean seven days. Sometimes it can be two weeks."

Politics-always keeping things flexible. But in the realm of taxation, how flexible is "one month"?

If the appeal is to be filed within three months from the receipt of the impugned order, does this mean 90 days or three calendar months?

Was the petitioner before the Kerala High Court right in filing the appeal within four (extended) calendar months or was the learned Joint Commissioner (Appeals) right in rejecting the appeal as it was filed beyond 120 days (his four months)?

Certainly, a tricky question!

Let's move to Income Tax for a moment.

Eleven years ago, a Special Bench of the ITAT deliberated on a similar conundrum. 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 the General Clauses Act, 1897.

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

The Tribunal wisely observed,

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 found that on some occasions 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) 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 Customs Act has similar provisions. As per Section 129A (3), an appeal is to be filed within three months, while as per Section 129A (4) a memorandum of cross-objections has to be filed within forty-five days.

If three months were to be ninety days, the Legislature would have used 'ninety days' instead of 'three months'.

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".

Please see 2014-TIOL-156-ITAT-AHM-SB

Coming back to GST, nearly two years ago the Allahabad High Court also faced the month mystery. - 2023-TIOL-548-HC-ALL-GST

An appeal was dismissed on the ground that it was beyond maximum period, as prescribed under the statute i.e. four months. The appellate authority computed four months as each month would be of 30 days.

Section 107 of Goods and Services Tax Act, 2017 provides that an appeal, may be filed before appellate authority within three months from the date on which the order is communicated to the person concerned. Sub-Section (4) of Section 107 of the Act, 2017 provides that the appellate authority may, if it is satisfied that the appellant was prevented by sufficient cause from presenting it within the period of three months, may allow it to be presented within a further period of one month.

The High Court observed,

Bare reading of the provisions of Section 107 of the Act, 2017 reflects that it is not 120 days, but it is four months and, therefore, it would depend upon the date on which the adjudicating authority passes the order. The four months may be of 121 days or 122 days. In the present case, in four months, around 121 days come, and the appeal was filed on 121st day., the appeal has been summarily dismissed only on the ground that it was beyond 120 days, and not within 120 days.

The Standing Counsel for the government did not dispute either legal position or the factual position.

The High Court allowed the petition and quashed the impugned order and directed the Appellate Authority to proceed with the appeal, and decide the same on merit, expeditiously, in accordance with law.

In the Kerala case referred to in the beginning, the counsel for the petitioner placed reliance on the judgment of the Supreme Court in State of Himachal Pradesh v. Himachal Techno Engineers, to contend that if the word 'month' is used in any statute, the same can only be counted in British calendar months, and therefore, the appeal filed on 06-11-2023 was clearly within the condonable period mentioned in Section 107 of the CGST Act.

In the above case, the Supreme Court held,

"14. A "month" does not refer to a period of thirty days but refers to the actual period of a calendar month. If the month is April, June, September or November, the period of the month will be thirty days. If the month is January, March, May, July, August, October or December, the period of the month will be thirty one days. If the month is February, the period will be twenty nine days or twenty eight days depending upon whether it is a leap year or not

15. The legislature had the choice of describing the periods of time in the same units, that is, to describe the periods as "three months" and "one month" respectively or by describing the periods as "ninety days" and "thirty days" respectively. It did not do so. Therefore, the legislature did not intend that the period of three months used in sub-section (3) to be equated to 90 days, nor intended that the period of thirty days to be taken as one month.

17. In Dodds v. Walker - (1981) 2 All ER 609 (HL), the House of Lords held that in calculating the period of a month or a specified number of months that had elapsed after the occurrence of a specified event, such as the giving of a notice, the general rule is that the period ends on the corresponding date in the appropriate subsequent month irrespective of whether some months are longer than others.

18. Therefore, when the period prescribed is three months (as contrasted from 90 days) from a specified date, the said period would expire in the third month on the date corresponding to the date upon which the period starts. As a result, depending upon the months, it may mean 90 days or 91 days or 92 days or 89 days".

In the light of the law laid down by the Supreme Court in Himachal Techno Engineers and having regard to the provisions contained in Section 3(35) of the General Clauses Act, 1897, the High Court took the view that the appeal presented by the petitioner against the order dated 06-11-2023 was within the condonable period mentioned in Section 107 of the CGST Act.

Therefore, the writ petition was allowed. The order of the Appellate Authority was quashed. The appeal filed by the petitioner along with the application for condonation of delay is restored to the file of the Appellate Authority, who shall pass fresh orders taking note of the observations of the High Court.

The law is clear; The Supreme Court has clarified it; several High Courts have followed it, but the department still has doubts; no, they don't have doubts - the best way to deal with an appeal is not to admit it.

Maybe NACIN (National Academy of Customs, Indirect Taxes and Narcotics) should have this subject in their syllabus. When the law wants you to calculate three months, you have no business to substitute three months as ninety days.

Can the Board issue instructions?

Until next week

Comments/feedback welcome at vijaywrite@tiol.in or 9848111243 (WhatsApp)