Decoding the imbroglio on computation of limitation period for filing Appeals under GST Regime

Ajay Sanwaria, Counsel & Shreya Mundhra, Senior Associate, Argus Partners

Introduction

Close to five years since the introduction of Goods and Services Tax ("GST") laws, multiple proceedings have been initiated by the departmental authorities, leading to a steep rise in litigation matters at various forums. Amongst others, recently an interesting issue relating to computation of the limitation period within which an appeal under Section 107(1) of the Central Goods and Services Tax Act, 2017 ("CGST Act")[1] can be filed electronically before Appellate Authority[2] under the GST Laws, has become the subject matter of dispute before multiple High Courts.

Before we delve deeper on the contentious issue, let us examine in detail the relevant legal backdrop. It may however be noted that the scenario deliberated upon in the present article only pertains to a situation where the Order against which an appeal can be filed has not been uploaded online and has been communicated either by way of an e-mail or in physical form to the Appellant.

Analysis

Section 107(1) of the CGST Act provides that any person aggrieved by any decision or order passed under the Act by an adjudicating authority may appeal to the Appellate Authority "within three months from the date on which the said decision or order is communicated to such person". Section 107(4) of the CGST Act further provides that where the Appellant is prevented by sufficient cause from presenting the appeal within the prescribed time, the Appellate Authority may "allow it to be presented within a further period of one month". Rule 108(1) of the Central Goods and Services Tax Rules, 2017 ("CGST Rules")[3] provides that the appeal under Section 107(1) of the CGST Act shall be filed in "FORM GST APL-01, along with the relevant documents, either electronically or otherwise as may be notified by the Commissioner".

On a perusal of the aforesaid provisions, it can be inferred that the GST laws contemplate filing of an appeal electronically or otherwise as may be notified within a period of three months from the date on which the Order is communicated to the Appellant. In the absence of any notification prescribing any other mode for filing, the appeal under the GST laws can only be filed electronically. In case of any sufficient cause preventing the Appellant to file the appeal within time, an extension of one month may be granted.

For the purpose of filing of an appeal electronically, the GST portal provides for creation of a new application by way of feeding in the nature of the application involving the Order Type along with the Order Number. Unless and until such details of the Order issued online are provided, an application for filing of an appeal cannot be created in the system. Correspondingly, it is only plausible that the impugned Order should have been uploaded by the authorities prior to filing of the appeal, in the absence of which the Appellant is precluded from filing the appeal electronically. Furthermore, when the appeal is required to be filed in an electronic manner by the appellant, it reasonably implies that the mode of communication for computing the time limit under Section 107 of the CGST Act should also be computed from the date of online uploading of the appeal on the GST Portal and not otherwise.

At this juncture, let us now refer to certain rulings wherein the issue under dispute has been examined by the Courts.

In the case of Gujarat State Petronet Limited v. Union of India [2020-VIL-426-GUJ], a physical copy of the Order was provided to the Petitioner instead of an electronic copy, due to certain technical issues. In the said circumstances, the Petitioner filed a manual copy of the appeal after expiry of the statutory period of limitation and prayed for a condonation of the delay, which was rejected by the authorities and the proceedings culminated into an application before the Hon'ble High Court of Gujarat. In view of the order not being uploaded, the Hon'ble High Court condoned the delay, and held that though the physical copy of the adjudication order was handed over to the petitioner, the time period to file appeal would start only when the order is uploaded on the GST portal in as much as without the order being uploaded, the appeal could not have been filed.

However, in the case of M/s. Meritas Hotels Private Limited v. State of Maharashtra [2021-VIL-861-BOM], where the Order was communicated to the assessee by way of an e-mail and subsequently uploaded on the portal, the Hon'ble Bombay High Court has adopted a divergent view and held that the date of communication for filing the appeal shall be the date of e-mail and not the date of uploading the Order. While arriving at its conclusion, the Hon'ble High Court adopted a literal interpretation and observed that Rule 108 does not prescribe that the appeal is to be filed only after impugned assessment order is uploaded on GSTN portal online. In the absence of any such requirement, the date of communication was held to be the date of e-mail of the Order.

Recently, the Hon'ble Kerala High Court dealt with a similar issue in the case of Jose Joseph v. Assistant Commissioner of Central Tax, Alappuzha & Others [2021-VIL-914-KER], wherein the Order was not uploaded on the portal but sent manually to the assessee, against which an appeal was filed manually with a delay beyond the condonable period. In the said case, the Hon'ble High Court while adopting a purposive interpretation of the law held that when the mode of appeal prescribed by Rules is only the electronic mode, the time limit of three months can start only when the assessee had the opportunity to file the appeal in the electronic mode. Consequently, the assessee cannot be blamed if he waited for the order to be uploaded to the web portal, even if he had in the meantime received the physical copy of the order. In light of the same, the Hon'ble Court directed for the appeal to be considered as filed within time by the assessee.

Conclusion and Recommendation

The Hon'ble Supreme Court in the case of K.P. Varghese v. ITO, [[1981] 131 ITR 597], has held that Courts must eschew literalness in the interpretation of a statutory provision and adopt an interpretation in line with the object and purpose of the legislature and the context in which it is used. While the Hon'ble Kerala High Court and Hon'ble Gujarat High Court have emphasized on the need to upload the Order on the portal prior to filing the appeal, it appears that the Hon'ble Bombay High Court has neither appreciated the intention of the legal provisions under Section 107 of the CGST Act read with the rules nor examined the feasibility of filing an appeal without an order being uploaded on the portal.

In our view, the lacuna at the end of the departmental authorities in cases where the Order is either not uploaded at all or uploaded after communicating the same through an alternate mode, viz. e-mail or physical copy etc. currently leaves the bonafide assesses in a limbo, which may cause delays in filing of the appeal under the GST Law, thereby denying such assessees the benefit of an appellate remedy. Considering the fact that the entire GST Law is system driven and that an appeal under Section 107 of the CGST Act can only be filed after the Order is uploaded online, one can only hope that the glitches at the end of the Government are reduced and that an in-depth examination and purposive interpretation of the law is adopted so that the assessees do not lose out on their rightful claims and are not burdened by the unjust demands imposed on them.

[Date: 24/01/2022]

(The views expressed in this article are strictly personal.)