Condonation Must Be Considered Despite Deemed Service On GST Portal: Rajasthan HC Sets Aside Dismissal Of GST Appeal On Limitation

In a recent judgment a Division Bench comprising, Justice Pushpendra Singh Bhati and Justice Sanjeet Purohit on dismissal of appeal on account of limitation, emphasized that condonation of delay application must be judiciously considered. The Rajasthan High Court allowed the writ petition while upholding the legal principle of deemed service through the GST portal as a valid communication.

As for recording of reasons stipulated in the scheme of GST, the Rajasthan High Court ensuring substantive justice over procedural rigidity stated that

“5.5. Fiscal statutes, while required to be implemented with rigour, cannot be interpreted in a manner that sacrifices substantive justice at the altar of technicality, especially when the statute itself provides a window for condonation. Denial of appellate scrutiny in such circumstances would amount to shutting the doors of justice, resulting in civil consequences disproportionate to the procedural lapse alleged.”

A demand of ₹65,19,288 was raised on the Construction Company for alleged excess Input Tax Credit (ITC) utilisation. An appeal was filed against the demand order before the Appellate Authority, State Tax, Jodhpur along with an application for condonation of delay. This appeal came to be dismissed by the Appellate Authority on the ground of limitation.

Section 107(1) of the CGST Act mandates limitation period of 3 months with an extension of 1 month.

Advocate Vishal Singhal argued that order never served on registered email and it came to light only through recovery proceedings (DRC-13). It was urged that Appellate Authority had mechanically computed limitation from the date of upload of the order on the GST portal, without examining that the delay was bona fide, not deliberate. Further, he put forth the aspect of lack of proper hearing under Section 75 (4) & (5) of the CGST Act, 2017 especially when dismissal of appeal was based solely on limitation without considering the application for condonation of delay filed in terms of Section 107 (4) of the Rajasthan Goods and Services Tax Act, 2017.

Opposing the Writ Petition, it was argued that limitation runs from the date of uploading of orders on the GST portal.

The Rajasthan High Court clarified that uploading of orders on the GST portal, as a valid mode of communication was integral to the digital tax architecture and cannot be diluted. However, it was made clear that Doctrine of Deemed Service could not be applied mechanically or punitively, particularly at the stage of condonation of delay, where the statute itself vests discretion in the Appellate Authority to examine whether sufficient cause has been shown. The Rajasthan High Court

opined that

“The power under Section 107(4) of the RGST Act is not illusory; it is intended to balance statutory discipline with fairness and justice”

On non-consideration of application for condonation of delay in filing appeal, it recorded the fact that the Construction Company gained actual knowledge of the dismissal of appeal through appellate order only once recovery proceedings were initiated was a “relevant circumstance for considering condonation of delay.”

The Rajasthan High Court thus, remanded the appeal back to Appellate Authority, State Tax for examining the application for condonation of delay on merits.

Case Detail: Akash Construction vs. The State of Rajasthan & Ors.

For Petitioner: Advocate Vishal Singhal

For Respondent: AAG Mahaveer Bishnoi

Click here to read the judgment.