Facts of the Case:
In this case, the petitioner, engaged in the supply of services, was issued a Show Cause Notice dated 07.09.2021 under Section 74 of the CGST Act alleging tax evasion. The petitioner responded that the case merely involved delayed filing of GST returns for five months and that the applicable tax, interest, and late fee/penalty had already been discharged through subsequently filed returns. Despite the explanation, an Order-in-Original dated 27.01.2023 was passed under Section 74 of the Act. The physical copy of the order was served on the petitioner on 25.03.2023.
The petitioner filed an appeal under Section 107 of the CGST Act on 28.12.2023. In the meanwhile, the Central Government issued Notification No. 53/2023-Central Tax dated 02.11.2023 prescribing a special procedure for filing appeals in cases where taxpayers had missed the statutory limitation period. However, the Appellate Authority rejected the appeal on 11.06.2024 solely on the ground that it was filed beyond the normal limitation period and that delay beyond the period prescribed under Section 107 could not be condoned.
Aggrieved by the rejection, the petitioner approached the Gujarat High Court.
Issue:
Whether the benefit of Notification No. 53/2023-Central Tax dated 02.11.2023 is available to a taxpayer who filed an appeal before 31.01.2024 and fulfilled the prescribed conditions, even though the appeal had not been rejected on limitation grounds prior to issuance of the notification.
Held That:
The Gujarat High Court held that the Notification dated 02.11.2023 was intended to grant substantive relief to taxpayers who had missed the limitation period and should therefore receive a liberal and purposive interpretation.
The Court rejected the Revenue’s argument that the notification was applicable only to appeals already rejected on limitation grounds. It observed that such an interpretation would place taxpayers who proactively filed appeals before the cut-off date of 31.01.2024 in a worse position than those whose appeals had already been rejected.
The Court interpreted the notification as covering four categories:
- Taxpayers who failed to file appeals within limitation;
- Appeals already rejected on limitation grounds;
- Appeals pending before the appellate authority on the date of notification; and
- Appeals filed before the extended cut-off date of 31.01.2024 subject to compliance with the prescribed conditions.
Since the petitioner had filed the appeal before 31.01.2024 and had admittedly fulfilled the payment conditions stipulated in paragraph 3 of the notification, the benefit of the notification could not be denied. The Court further criticized the Appellate Authority for completely ignoring Notification No. 53/2023 while deciding the appeal, observing that authorities are expected to take judicial notice of notifications governing appellate proceedings.
Accordingly, the impugned appellate order was quashed and the matter was remanded to the Appellate Authority for decision on merits within twelve weeks.
The Court examined the deliberations of the 52nd GST Council Meeting held on 07.10.2023. The Council noted that a large number of taxpayers were unable to file appeals within the prescribed period, particularly in cases where recovery proceedings were initiated after substantial delay. The Council recognized that many appeals had either been rejected or were likely to be rejected on limitation grounds because of the restricted condonation powers under Section 107. Consequently, the Council recommended a special mechanism enabling such taxpayers to pursue appellate remedies upon payment of enhanced pre-deposit amounts.
Case Name: Adinath Rice Mill & Anr. Versus Union Of India & Ors. dated 03.08.2026
