Facts of the Case:

In this case, the petitioners had initially filed refund applications, which were rejected by the Adjudicating Authority on 16.12.2019. In appeal, the rejection orders were set aside on 08.10.2020 on the ground that the refund claims had been rejected without granting an opportunity of hearing, and the matters were remanded for fresh adjudication. Pursuant to the remand, the Adjudicating Authority issued notice and, after considering the petitioners’ reply, again rejected the refund claims by orders dated 03.10.2022.

Aggrieved by the fresh rejection, the petitioners filed rectification applications under Section 161 of the CGST/ GGST Act on 02.01.2023, i.e. within the prescribed period of 90 days. The Adjudicating Authority considered the rectification applications and rejected them by reasoned orders dated 14.09.2023. Thereafter, on 11.01.2024, the petitioners filed appeals under Section 107 challenging both the original refund rejection orders dated 03.10.2022 and the rectification orders dated 14.09.2023. The Appellate Authority, however, rejected the appeals on 31.05.2024, holding them to be barred by limitation by computing the limitation period from the original orders dated 03.10.2022.

Issue:

Where a taxpayer files a rectification application under Section 161 within the prescribed period and the same is subsequently decided by the Adjudicating Authority, the limitation for filing an appeal under Section 107 is required to be reckoned from the original adjudication order or from the date of the order disposing of the rectification application?

Held That:

The Court observed that the filing of the rectification applications under Section 161 within the prescribed period of 90 days and their subsequent disposal by reasoned orders on 14.09.2023 were undisputed facts. Despite these circumstances being specifically brought to the notice of the Appellate Authority, it mechanically computed the limitation period from the original adjudication orders dated 03.10.2022 and rejected the appeals under Section 107 on the ground that the statutory period, including the permissible condonable period, had expired.

The Court held that the filing and disposal of a valid rectification application is a vital factor directly affecting computation of limitation for the subsequent appeal. Where the rectification application has been filed within the prescribed statutory period and is thereafter adjudicated, the Appellate Authority cannot simply ignore the rectification proceedings and calculate limitation exclusively from the original order.

Accordingly, the Court held that the Appellate Authority was required to examine the limitation with reference to the rectification order dated 14.09.2023. The petitioners had filed the appeals on 11.01.2024, and therefore the Appellate Authority was required to determine whether the appeals were within the permissible period by taking the rectification order as the relevant point for computation.

The Court, however, clarified that this did not mean that the appeals were automatically within limitation. If, even after computing the limitation from the date of the rectification order, an appeal was found to be beyond the statutory period, the Appellate Authority would remain entitled to reject it as time-barred. What was impermissible was rejecting the appeals by calculating limitation solely from the original adjudication order while completely disregarding a validly filed and duly decided rectification application.

The Gujarat High Court quashed the appellate orders rejecting the appeals as time-barred and remanded the matters to the Appellate Authority for fresh consideration on merits.

Case Name: KANAN INTERNATIONAL PVT. LTD. & ANR. Versus UNION OF INDIA & ORS. dated 13.08.2026

Citation No. 2026 Taxo.online 2555