Benefit Of S.14 Limitation Act Applies To Appeals U/S 107 GST Act Where Rectification Application Is Filed Within Time: Allahabad High Court
The Allahabad High Court has held that the benefit of Section 14 of the Limitation Act can be granted to a party for filing appeal under Section 107 of the Goods and Service Tax Act where a rectification application under Section 161 of the GST Act was filed within time. Limitation for filing appeal under Section 107 of the GST Act is 3 months from the date of the order with...
The Allahabad High Court has held that the benefit of Section 14 of the Limitation Act can be granted to a party for filing appeal under Section 107 of the Goods and Service Tax Act where a rectification application under Section 161 of the GST Act was filed within time.
Limitation for filing appeal under Section 107 of the GST Act is 3 months from the date of the order with a grace period of one month which may be condoned by the appellate authority if he is satisfied that the appellant was prevented from filing the appeal within time with sufficient reason.
Limitation for filing rectification application under Section 161 of the GST Act is 3 months from the date of the order in which rectification is sought.
The bench of Justice Saumitra Dayal Singh and Justice Vivek Saran held
“to apply the underlying principle of Section 14 Limitation Act, wherever an application seeking rectification of mistake apparent on the face of record may be filed within time, as may have been done in the present case, the application of the underlying principle of Section 14 Limitation Act, may not be examined with a microscope, any further. To the extent that application is filed 'bona fide' in 'good faith' and is pursued, that principle would apply, without doubt. The only exception to that principle may be-where the application seeking rectification of a mistake is itself filed beyond the period of limitation prescribed under Section 161 of the Act. There no such benefit may arise.”
Further, the Court held that the period of limitation of filing appeal and rectification application run simultaneously after passing of the adjudication order. However, once rectification application is filed, then the period for filing appeal would start from the date the rectification application is decided.
“If no application is filed under Section 161 of the Act to seek rectification (of a mistake in such order), upto three months, the limitation to seek rectification would expire at the end of three months. In that case, simultaneously, the normal period of limitation to file first appeal against such order would also have run continuously and concurrently and, therefore, it would also be exhausted, simultaneously. If, however, before expiry of three months, an application is filed under Section 161 of the Act, to seek rectification in that order, the running of limitation (to file appeal against such order), would be put in abeyance from the date of filing of such application, upto the date when that application is decided.”
A ex-parte adjudication order was passed against the petitioner on 23.04.2024. Petitioner filed a rectification application on 23.5.2024 which was rejected on 22.10.2024. Thereafter, petitioner filed an appeal under Section 107 of the GST Act on 29.11.2024. The appeal was rejected as time barred.
Challenging the rejection of the appeal, petitioner claimed benefit of Section 14 of the Limitation Act which provides for exclusion of time which has been spent by the aggrieved in bona-fidely pursuing proceedings before a court without jurisdiction.
Relying on the decision of the Supreme Court in M.P. Steel Corporation vs. Commissioner of Central Excise, the Court observed that Section 14 of the Limitation Act is a beneficial piece of legislation which must be construed liberally.
“the underlying principle of Section 14 recognizes-that it applies to persons (claiming its benefit), who may have admittedly made a mistake. Only then, the applicability of Section 14 of the Limitation Act may arise and not otherwise. As to what nature of mistake may lead to application of Section 14 of the Act, it is clear that it may be in the nature of lack of jurisdiction or defect of like nature (construed liberally). As to the wrong forum before whom, such mistake may have been committed, Section 14 is categorical. It includes in its scope, proceedings instituted before the original authority.”
The Court held that whether the rectification application is bona-fide/ maintainable or not is to be decided in those proceedings. However, only because a forum of remedy has been created wherein jurisdiction can be exercised in certain cases and not others, would not lead to necessary conclusion that the rectification application was not bona-fide. It held that benefit of Section 14 can be granted where the rectification application has been filed within time.
In case of the petitioner, the Court held that the rectification application was within limitation and the appeal was also filed within 3 months from the date of the ex-parte adjudication order. Therefore, it allowed the writ petition and directed that the appeal be restored to its original number.
Case Title: M/S Prakash Medical Stores v. Union Of India And 3 Others [WRIT TAX No. - 5865 of 2025]
Counsel for Petitioner: Shubham Agrawal