Time Spent on Rectification Can’t Make Appeal Late: Allahabad HC Allows GST Appeal

The Allahabad High Court has held that the underlying principle of Section 14 of the Limitation Act, 1963—aimed at advancing substantial justice—would apply to appeals filed under the Uttar Pradesh Goods and Services Tax (UP GST) Act, 2017, even though the Limitation Act does not apply in strict terms to GST proceedings. The Bench of Justice Saumitra Dayal Singh and Justice Vivek Saran undertook a detailed examination of Sections 107 and 161 of the UP GST Act, along with Section 14 of the Limitation Act. While Section 5 of the Limitation Act (condonation of delay) stands excluded due to the self-contained limitation scheme under Section 107(4) of the GST Act, the same logic does not automatically extend to the principle enshrined in Section 14. The dispute arose from an ex parte adjudication order dated 23 April 2024 passed under Section 73 of the UP GST Act for the financial year 2018–19. The order created a tax and cess demand of ₹7.81 lakh along with interest of ₹7.86 lakh and a penalty of ₹78,184. Aggrieved by the order, the taxpayer, M/s Prakash Medical Stores, first filed an application seeking rectification of errors under Section 161 of the Act on 23 May 2024. This rectification application was rejected as not maintainable by an order dated 22 October 2024. Thereafter, the petitioner filed a statutory appeal under Section 107 of the UP GST Act on 29 November 2024. However, the appellate authority dismissed the appeal as barred by limitation, holding that it had been filed beyond the maximum condonable period of four months from the date of communication of the adjudication order. The central question before the High Court was whether the time spent by the taxpayer in bona fide prosecuting the rectification application under Section 161 could be excluded while computing the limitation period for filing an appeal under Section 107, by applying the principle underlying Section 14 of the Limitation Act. The department argued that the GST Act prescribes a rigid limitation framework—three months for filing an appeal, extendable by only one month on sufficient cause—and that this statutory scheme leaves no room for importing principles from the Limitation Act. Reliance was placed on Supreme Court decisions such as Hongo India Pvt. Ltd. and Glaxo Smith Kline Consumer Health Care Ltd. to contend that delay beyond the prescribed period could not be condoned. Relying heavily on the Supreme Court’s judgment in M.P. Steel Corporation v. Commissioner of Central Excise (2015), the Bench emphasized the conceptual distinction between condonation of delay and exclusion of time. Section 14, the Court observed, does not extend the limitation period but excludes the time spent in bona fide proceedings pursued with due diligence before an inappropriate forum or in circumstances where the proceeding ultimately fails without a decision on merits. The Court also referred to consistent views taken by the Madras High Court and the Punjab and Haryana High Court, as well as observations of a coordinate Bench of the Allahabad High Court, affirming that the principle of Section 14 is justice-oriented and deserves liberal application. The Court clarified that an application under Section 161 for rectification of errors is a statutory remedy available under the GST Act. Where such an application is filed within the prescribed time and pursued bona fide, the period during which it remains pending must be excluded while computing limitation for filing an appeal. The Bench rejected the Revenue’s argument that filing a rectification application amounted to a misconceived remedy. It held that merely because the rectification was ultimately rejected did not imply lack of good faith or due diligence on the part of the taxpayer. The only exception, the Court noted, would be where the rectification application itself is filed beyond the limitation period prescribed under Section 161—an eventuality not present in this case. After excluding the period during which the rectification application remained pending, the Court found that the appeal had been filed well within the original three-month limitation period. Consequently, the order dated 5 March 2025 dismissing the appeal as time-barred was set aside, and the appeal was restored to its original number and status. The appellate authority was directed to decide the matter expeditiously on merits, in accordance with law. Case Details Case Title: M/S Prakash Medical Stores Versus UOI Case No.: WRIT TAX No. - 5865 of 2025 Date: 12/12/2025 Counsel For Petitioner: Shubham Agrawal Counsel For Respondent: A.S.G.I., C.S.C., Sudarshan Singh Click Here To Read Order Read More: Allahabad HC Denies ITC on DEPB-Based Imports Not Used Within Uttar Pradesh

Time Spent on Rectification Can’t Make Appeal Late: Allahabad HC Allows GST Appeal

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