The Hon'ble High Court of Delhi in Addichem Speciallity LLP v. Special Commissioner I, Department of Trade and Taxes [W.P.(C) 14279/2024 and connected matters] delivered a judgment on the scope of condonation of delay under the CGST Act, 2017. The Court conclusively held that the provisions of Limitation Act, 1963, particularly Section 5, cannot be invoked to condone delay in filing appeal beyond the prescribed period of three months plus one month under CGST Act, 2017.
Facts of the Case:
The present batch of petitions emanated from orders issued by the Appellate Authority dismissing appeals on grounds of limitation under Section 107 of the CGST Act, 2017. The petitioners were registered proprietors/dealers under the CGST Act holding different registration numbers who were assessed by respective adjudicating authorities, resulting in certain demands being raised against them and in some instances, cancellation of their GST registrations.
In W.P.(C) 14279/2024, the Respondent issued a SCN on March 31, 2022, proposing cancellation of the Petitioner firm's GST registration citing "non-commencement of business within six months from the date of registration" for voluntary registration. The Petitioner submitted a reply on October 3, 2022, providing explanations and necessary documentation. Despite this, the registration was cancelled on October 27, 2022, retrospectively from June 7, 2018. The Petitioner filed an appeal on February 12, 2024, which was dismissed as time-barred. The delay was attributed to attempts to rectify a clerical mistake in the cancellation order which erroneously stated that no reply to the SCN had been submitted.
In W.P.(C) 15045/2024, the Petitioner, registered since April 23, 2019, faced difficulties due to the demise of their Chartered Accountant's family member from COVID-19 and the nationwide lockdown, leading to non-filing of GST returns from February 2022 to June 2022. A SCN was issued on July 26, 2022, followed by cancellation of registration on March 23, 2023, retrospectively from April 24, 2019. The appeal filed on January 25, 2024, was dismissed for being time-barred.
In W.P.(C) 16861/2024, the Petitioner received a SCN on November 5, 2020, for cancellation based on physical verification finding the business non-existent. Despite submitting a reply explaining temporary vacation of premises due to COVID-19, the registration was cancelled on November 26, 2020. The appeal filed on December 21, 2023, was dismissed solely on grounds of limitation.
Similar patterns emerged in other petitions where GST registrations were cancelled, and appeals were filed beyond the prescribed limitation period. The petitioners cited various reasons including COVID-19 impact, family emergencies, communication gaps with consultants, and technical difficulties for the delay in filing appeals.
The Respondents strongly contended that once a statute prescribes a specific period of limitation, the Appellate Authority lacks inherent power to condone delay by invoking provisions of the Limitation Act, 1963. They emphasized that the CGST Act is a special statute and a self-contained code with an inbuilt mechanism that impliedly excludes the application of the Limitation Act.
Issue:
Whether the Appellate Authority under Section 107(4) of the CGST Act is authorized to condone delay in filing appeal beyond the prescribed period of three months plus one month, and whether the High Court, in exercise of its extraordinary jurisdiction under Article 226, may direct such condonation?
Held:
The Hon'ble Delhi High Court in W.P.(C) 14279/2024 held that:
The Court fundamentally observed that Section 107(4) of the CGST Act prescribes a specific framework: a general three-month period for filing appeals, followed by a possible extension of one month if sufficient cause is shown. The Court emphasized that this provision deliberately stops at prescribing the additional one-month period and does not contemplate any further extensions, thereby clearly excluding the general principles of condonation of delay.
The Court established a crucial principle regarding the interplay between special statutes and general laws. It held that the right to seek condonation of delay depends entirely on whether the statute creates a special and independent regime with respect to limitation or leaves room for invoking general provisions of the Limitation Act. In this case, the CGST Act creates a complete code in itself with specific limitation provisions.
Drawing from established precedents, particularly Singh Enterprises v. CCE, the Court reinforced that statutory authorities, being creatures of statute, cannot exercise powers beyond what is explicitly granted to them. Therefore, the Appellate Authority lacks jurisdiction to condone delay beyond the statutorily prescribed period.
The Court explicitly rejected the contrary views expressed by some High Courts, particularly distinguishing the decisions in Mukul Islam and Venkateshwara Rao Kesanakurti cases. It held that these decisions failed to appreciate the legislative intent behind creating a specific limitation regime under the CGST Act.
Addressing the scope of Article 226 powers, the Court, relying on the Glaxo Smith Kline case, clarified that even the High Court's extraordinary jurisdiction cannot extend limitation periods prescribed by statute, as such action would render the statutory provisions otiose.
Relevant Sections:
- Section 107(1) of CGST Act, 2017 - "Any person aggrieved by any decision or order passed under this Act... may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person."
- Section 107(4) of CGST Act, 2017 - "The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month."
- Section 5 of Limitation Act, 1963 - Provision for extension of prescribed period in certain cases
- Section 29 of Limitation Act, 1963 - Savings provision regarding special laws
Cases Referred:
1. Singh Enterprises v. CCE (2008) 3 SCC 70 - Established that statutory authorities cannot condone delay beyond permitted period
2. Commissioner of Customs and Central Excise v. Hongo (2009) 5 SCC 791 - Clarified application of limitation provisions in tax matters
3. Asst. Commr. (CT), LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd. (2020) 19 SCC 681 - Discussed scope of High Court's powers regarding statutory limitation
4. Nandan Steels & Power Ltd. v. State of Chhattisgarh 2022 SCC OnLine Chh 1428 - Interpreted Section 107 of CGST Act
5. Yadav Steels v. Commissioner 2024 SCC OnLine All 2396 - Upheld strict application of limitation under CGST Act
6. Distinguished: Mukul Islam v. Assistant Commissioner of Revenue 2024 SCC OnLine Cal 8544
7. Distinguished: Venkateshwara Rao Kesanakurti v. State of AP 2024 SCC OnLine AP 3905
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