The Article “TESTING THE LIMITATIONS OF SECTION 107(4) OF THE CGST ACT, 2017: An exercise in futility?” is written by Advocate Hersh Choudhary, an Advocate practicing Indirect Tax Laws and Partner (Taxation) at Nyaaya Legal, Mumbai.
The Goods and Services Tax Appellate Tribunal (‘GSTAT’) has constituted a Special Bench to examine the power of the First Appellate Authority/GSTAT to condone the delay in filing an appeal before the First Appellate Authority beyond the period prescribed under Section 107(4) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’). When the said Special Bench had been constituted, the number of appeals being considered by the Bench was 24. Since then, the number has surpassed 4000, which now forms a significant batch of appeals involving a question with an objective answer, being subjected to subjective scrutiny.
However, amidst this exercise being undertaken to address the greater good, lies a more fundamental question, as to ‘whether GSTAT has the power to condone the delay in filing an appeal beyond the period prescribed under Section 112(6) of the CGST Act?’ While the answer to this question also would entail the same logic and implementation of the Law laid down by the Supreme Court in the cases of Singh Enterprises v. Commissioner of Central Excise, Jamshedpur and Assistant Commissioner, LTU, Kakinada & Ors. v. Glaxo Smith Kline Consumer Health Care Limited, the one being considered by the Special Bench currently is imminent while the cause-of-thought for the other hasn’t arisen yet.
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The Supreme Court, in the aforestated judgments, has categorically observed that the period of limitation prescribed under a statute is sacrosanct and ought not be condoned, even by Constitutional Courts. Having said that, various High Courts have granted reliefs to assessees by condoning delays beyond the period prescribed under Section 107(4) of the CGST Act, in the peculiar facts and circumstances of those cases, but at the same time, High Courts have generally applied the principle laid down by the Hon’ble Supreme Court and have refused to interfere with the orders passed by the First Appellate Authorities.
The scope in any appeal for an appellate forum is restricted to examine the correctness of the order impugned before it. When the unambiguous Section 107(4) of the CGST Act empowers the First Appellate Authority to condone delays of upto one month only, that too on being satisfied that there was sufficient cause for such delay, the said provision really leaves no choice for the First Appellate Authority to entertain a different view and it is therefore, statutorily bound to dismiss appeals filed beyond the condonable period. This being the position, there can be no infirmity found in the view adopted by the First Appellate Authority and accordingly, the Special Bench may find itself with minimum room to navigate the issue at hand. Under similar circumstances, when a Petition under Article 226 of the Constitution of India had been filed before the Madras High Court seeking a Writ of Mandamus directing the First Appellate Authority to admit an appeal filed beyond the condonable period of one month, the Hon’ble High Court observed that there was no infirmity in the order passed by the First Appellate Authority and therefore, did not warrant interference by the Court. The Court, however, deemed it fit to grant liberty to the assessee to challenge the Adjudication Order.
Even if the Special Bench were to take a view that the First Appellate Authority or GSTAT has the power to condone the delay beyond the period prescribed under Section 107(4) of the CGST Act, it would continue to be bound by the judgments of the Hon’ble Supreme Court and such a view would be in violation of Article 141 of the Constitution of India and the principles of judicial discipline. Therefore, in a manner of speaking, the consideration of the issue by the Special Bench may have given hope to aggrieved assessees, some maybe even genuine, yet it is but only a fait accompli. A more prudent approach to the issue at hand may have been to invite the Hon’ble Supreme Court to re-examine its earlier view, in an appropriate proceeding.
On the brighter side of things, the GSTAT would dispose over 4000 appeals, which could pave the way for speedy dispensation of justice, something that taxpayers have long desired. Unless ofcourse, the Revenue were to throw a spanner in the works and question the very constitution of the Special Bench.
The constitution of Benches of GSTAT is governed by Section 109 of the CGST Act. Section 109(8) provides that all appeals are to be heard by a Division Bench comprising a Judicial Member (including the Vice President) and a Technical Member unless the tax, Input Tax Credit, fine, fee or penalty in dispute is less than fifty lakh rupees, in which case, the appeal would be heard by a Single Member. Section 109(5) read with S.O. 4219(E) dated 17.09.2025 states that when a class of cases involving an identical question of Law is pending before two or more State Benches, such class of cases shall be heard only by the Principal Bench.
Since over 4000 appeals are pending across the Principal and State Benches involving an identical issue, such appeals forming a class are required to be heard by the Principal Bench. However, the CGST Act nowhere provides for the constitution of a ‘Special Bench’ comprising the President, a Judicial Member and a Technical Member. Rule 50 of the Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025 (‘Procedure Rules’) provides for reference to ‘Larger Bench’ only in cases of difference of opinion between Members on a Bench in deciding an appeal, which would operate in furtherance to Section 109(9) of the CGST Act. Therefore, even the said Rule 50 does not provide for constitution of a ‘Special Bench’ and hence, the very power to constitute the present Special Bench may be brought into question.
The saving grace could either be Section 109(11) of the CGST Act which states that no act or proceedings of the Tribunal shall be questioned or invalid merely on the ground of defect in constitution or the inherent powers of GSTAT under Rule 10 of the Procedure Rules, which allows the GSTAT to make such orders or give directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. The preliminary question could, therefore, be whether the said Rule 10 is a carte blanche which can be used to make orders or give directions that may traverse beyond the statutory provisions of the very statute that empowered the Tribunal at the first place to make rules to regulate its own procedure.
Whichever way the matter is decided, it will be an important decision and would not only impart more clarity to the functioning of GSTAT but also put a quietus to an issue which continues to bother over 4000 assessees and their respective First Appellate Authorities alike.
