Missed GST deadlines not fatal where intent to comply exists; Rajasthan HC condones 160-day delay

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Rajasthan High Court: In a petition filed by the petitioner, a registered proprietor firm under Central Goods and Services Tax Act, 2017 (CGST Act) and Rajasthan Goods and Services Tax Act, 2017 (RGST Act), seeking directions to quash the order in appeal (OIA) and order in original (OIO) whereby its GST registration was cancelled, the Division Bench of Arun Monga* and Yogendra Kumar Purohit, JJ., held that due to lack of proper advisory by the counsel/consultant accountant, the petitioner was deprived of filing the appeal within limitation, and mere absence of a supporting affidavit of the consultant accountant/counsel, which was beyond the petitioner’s control, could not be a ground to reject the petitioner’s stand.

Thus, the Court allowed the petition by condoning the delay of 160 days in filing the appeal and remanded back to the appellate authority.

Background

In the present case, the petitioner was engaged in the business of executing works contract along with whole and retail trade and from Financial Year (FY) 2021-2022, it opted for filing the quarterly goods and services tax (GST) return. Being unaware of the procedural compliance as prescribed under the GST laws, the petitioner had engaged an accountant/local advocate for GST compliance on a regular basis. Since the incorporation of the firm, all legal compliances were being duly made through the accountant/local advocate.

On 15 January 2023, the respondents issued a show-cause notice against the petitioner proposing to cancel the GST registration on account of non-furnishing of returns for a period of 6 months and GST registration was suspended with effect from the same date. On 9 March 2023, the respondents passed an OIO cancelling the petitioner’s GST registration on the ground of non-filing of quarterly returns with retrospective effect from 1 April 2022.

The petitioner preferred an appeal before Respondent 4 on 18 December 2023 through a new lawyer/consultant, with a delay of 160 days due to petitioner’s bona fide belief that all GST related compliance, including the filing of the appeal, were being managed by the accountant/local advocate.

On 11 October 2024, Respondent 4 passed an OIA whereby the appeal filed by the petitioner was dismissed on the ground of being time-barred as per time-limit under Section 107, CGST Act. Aggrieved by the same, the petitioner approached the High Court.

Analysis and Decision

The Court stated that the principal question which arose in the case at hand was whether the High Court, in exercise of its extraordinary jurisdiction under Article 226 of the Constitution, was precluded from granting relief merely because the statutory period of limitation prescribed under Section 107, CGST Act was expired and whether the view taken in Molana Construction Company v. Central Goods and Service Tax¹ 2024 SCC OnLine Raj 3938 (Molana Construction case), represented a correct exposition of law when contrasted with Mateshwari Construction and Traders v. Comm. CGST² 2025 SCC OnLine Raj 7151 (Mateshwari Construction case) and Bharti Marbles and Granites v. CGST³ 2025 SCC OnLine Raj 7150 (Bharti Marbles case)

The Court stated that in Molana Construction (supra), it was held that the statutory right of appeal is a valuable right, and denying it due to procedural lapses, without examining manifest injustice or disproportionate consequences, is contrary to settled law. Further, the Court stated that Mateshwari Construction case (supra) and Bharti Marbles case (supra) which were relied upon by the respondents were distinguishable, as they turned on their own facts, especially absence of explanation. Their refusal of relief was based on conduct, not on limiting jurisdiction of Article 226 of the Constitution. They do not examine constitutional powers vis-à-vis limitation or legislative intent of the CGST Act and thus could not override Molana Construction (supra).

The Court considered S.K. Chakraborty & Sons v. Union of India, 2023 SCC Online Cal 4759 and expressed respectful disagreement stating that “we find ourselves unable to subscribe to the view that the statutory Appellate Authority under the CGST regime is empowered to invoke Section 5, Limitation Act to condone delay beyond the outer limit prescribed in Section 107(4), CGST Act.” The Court stated that in matters of fiscal legislation, strict interpretation applies. Section 107, CGST Act provides a complete limitation framework, that is, 3 months for appeal plus a maximum condonable delay of 1 month subject to satisfaction of sufficient cause, and the said cap is absolute. Allowing further extension through the Limitation Act, 1963 (Limitation Act) would defeat legislative intent.

The Court emphasised that “Taxing statutes admit of no intendment; they operate strictly within the four corners of the law.” Further, the Court stated that the legislative intent excluding the application of the Limitation Act is unambiguous from the plain language of Section 107, CGST Act. The Court stated that this statutory cap admits of no elasticity in the hands of the appellate authority and “if the legislative intent were to vest with the Appellate Authority with an open-ended discretion to condone delay by importing the Limitation Act, the express ceiling of one month would be rendered otiose”. The Court held that such an interpretation would amount to rewriting the statute and defeating the clear mandate of Parliament.

Further, the Court stated that “Had the legislature intended the Limitation Act to apply, it would have expressly so provided. The deliberate absence of any such provision in the CGST Act is not accidental. It is determinative.” The Court stressed that the appellate authority under the CGST Act is a pure creature of statute, deriving both its jurisdiction and its limits from Sections 107 and 107(4), CGST Act operates as a jurisdictional cap, not a mere procedural guideline.

The Court held that any attempt to invoke Section 5, Limitation Act to travel beyond this statutorily ordained boundary would amount to rewriting the provision and arrogating to the authority a power which the legislature has consciously withheld. Further, the Court stated that the distinction is not one of sympathy or sufficiency of cause, but of jurisdictional competence. “While Constitutional Courts, exercising plenary powers under Article 226 of the Constitution of India, may in appropriate cases condone delay so as to prevent a complete denial of remedy, such constitutional elasticity cannot be transposed into the statutory framework governing the Appellate Authority.”

Thus, the Court observed that the appellate authority does not possess the unrestricted discretion under Section 5, Limitation Act to condone delay beyond the ceiling prescribed in Section 107(4), CGST Act. The Court further stated that the CGST Act is not a statute enacted solely for revenue collection, it represents a comprehensive fiscal reform intended to consolidate multiple indirect taxes and, at the same time, to facilitate trade, commerce, and business continuity. Thus, the emphasis of the statute is not merely punitive compliance but regulated facilitation of economic activity.

The Court stated that cancellation of GST registration or missed appellate deadlines should not permanently debar a taxpayer from the GST framework, especially where the taxpayer intends to comply by filing returns, paying taxes, interest, and penalties, and rectifying defaults. “In such cases, denial of opportunity to an assessee undermines the inclusive and facilitative objective of the GST regime. Non-restoration of GST registration in such cases also directly impairs the assessee’s ability to conduct business, earn a livelihood and leads economic paralysis, thus, violating Articles 14 and 21 of the Constitution by imposing disproportionate and unreasonable hardship.”

The Court stated that in the case at hand, the petitioner had filed his duly sworn affidavit stating therein that it was due to the fault of the counsel/consultant accountant, who was vested with the responsibility of handling these matters, since, the same required the expertise of a professional and therefore, there was a bone fide belief that the needful was being carried out in the consultant counsel. The Court further stated that merely because an objection was taken by the respondents that the affidavit of the petitioner was not accompanied by supporting affidavit of his consultant accountant/counsel, an act beyond the control of the petitioner, due to change of his counsel by him, the stand taken by petitioner could not be given a short shrift.

Thus, the Court allowed the petition, by condoning the delay of 160 days in filing the appeal under Article 226 of the Constitution and set aside the OIA. Further, the Court remanded the appeal to the appellate authority for adjudication on merits in accordance with law.

[M.R. Traders v. Union of India, D.B. Civil Writ Petition No. 4558 of 2025, decided on 7-1-2026]

*Judgement authored by Justice Arun Monga

Advocates who appeared in this case:

For the Petitioner: Parasmal Chopra, Aman Rewariya, Prerna Chopra, PM Chopra, Dinesh Kumar Joshi and Shashi Vaishnav, Advocates

For the Respondent: Lucky Rajpurohit and Rajat Arora, Advocates

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