Facts of the Case:

The batch of writ petitions before the Madras High Court concerned the recurring issue of limitation for filing statutory appeals under Section 107 of the GST enactments where the taxpayer had first pursued a rectification petition under Section 161. The taxpayers contended that, having bona fide pursued the rectification remedy, the period spent in prosecuting such proceedings should be excluded while computing the limitation for filing an appeal. In several cases, the original orders were followed by rectification petitions which were ultimately rejected, and the subsequent appeals were dismissed by the appellate authorities as being beyond the prescribed period of limitation. The taxpayers therefore approached the High Court seeking restoration of their appellate remedy.

The taxpayers relied upon the principles underlying Section 14 of the Limitation Act, 1963, contending that although the Limitation Act technically applies to courts and not quasi-judicial authorities, the equitable principles underlying Section 14 could nevertheless apply to GST appellate proceedings. The Revenue opposed the claim, contending that the GST legislation constitutes a self-contained code, that Section 107 prescribes a specific limitation period of three months with only a further one-month condonable period, and that filing a rectification petition does not stop or suspend the limitation clock. It was also argued that Section 14 applies only where the earlier proceeding was incapable of being entertained due to jurisdictional or similar defects and could not be extended to a rectification petition which was duly entertained and rejected on merits.

Issue: 

Whether the period spent by a taxpayer in bona fide prosecution of a rectification application under Section 161 of the GST enactments can be excluded while computing the limitation period for filing an appeal under Section 107, by applying the principles underlying Section 14 of the Limitation Act, 1963. Whether the limitation period under Section 107 should commence from the date of disposal of the rectification application rather than from the date of communication of the original adjudication order.

Held That:

The Madras High Court held that although the Limitation Act, 1963, as such, is not applicable to proceedings before GST quasi-judicial authorities, the principles underlying Section 14 can be applied to an appeal under Section 107 of the GST enactments. The GST statutes do not expressly or impliedly exclude such principles. Accordingly, where a taxpayer has bona fide and diligently pursued a rectification petition under Section 161, the period spent in prosecuting such rectification proceedings can be excluded while computing the limitation for filing the statutory appeal.

The Court clarified that filing a rectification petition does not automatically stop or restart the limitation period under Section 107. The limitation ordinarily commences from the date of communication of the order-in-original. However, where the taxpayer establishes that the rectification proceedings concerned the same matter and same parties and were prosecuted with due diligence and in good faith, the entire period spent from the filing of the rectification petition until its disposal can be excluded. The Court further held that the expression “other cause of a like nature” in Section 14 is not confined to jurisdictional defects, and rejection of a rectification petition for want of an apparent error may, in appropriate circumstances, constitute a bona fide mistaken remedy.

At the same time, the Court cautioned that mere filing and diligent prosecution of a rectification petition is not sufficient to establish good faith. The rectification petition must have a reasonable or arguable basis; otherwise, taxpayers could deliberately file frivolous rectification applications to circumvent the limitation prescribed under Section 107. Thus, entitlement to exclusion has to be determined on the facts of each case.

Where the requirements are satisfied, the taxpayer is entitled to exclusion of the entire period consumed in prosecuting the rectification proceedings, after which the statutory three-month limitation under Section 107 would apply, along with the further one-month condonable period under Section 107(4), wherever applicable. Applying these principles, the Court directed the appellate authorities to entertain several appeals on merits where genuine grounds for rectification were established, while refusing exclusion in cases where the rectification petitions lacked a bona fide basis.

Case Name: E2E SUPPLY CHAIN SOLUTIONS LIMITED & ORS. v. DEPUTY COMMISSIONER (ST) GST APPEAL & ORS. dated 30.07.2026

Citation No. 2026 Taxo.online 2464