Section 107(4) GST Appeals: The 3+1 Month Challenge

Picture this: A small business owner, swamped with year-end compliance work, receives a GST adjudication order demanding a hefty tax payment. Shocked but determined to contest it, she prepares to file an appeal. But in the chaos of audits and paperwork, she misses the deadline - by just a couple of weeks. When she finally files the appeal, it’s rejected outright. Why? Because she crossed the 3 months + 1 month limit prescribed under Section 107(3) & (4) of the CGST Act.

What seems like a minor procedural lapse quickly escalates into a full-blown legal dead-end. While some High Courts have ruled that even a single day’s delay beyond the “3+1 month” window cannot be condoned, others have taken a more lenient view - applying the Limitation Act to extend relief. This divergence in judicial opinion has created a climate of confusion, especially for taxpayers in states where the stricter interpretation prevails.

The lack of uniformity not only undermines predictability in tax litigation but also places honest taxpayers at risk of losing their right to appeal due to minor delays. In such a scenario, only a definitive ruling by the Supreme Court or a legislative amendment can resolve the uncertainty and restore consistency across jurisdictions.

Section 5 of the Limitation Act, 1963 – The Relief Valve

“5. Extension of prescribed period in certain cases.-Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. Explanation.-The fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this section.”

In simple words, Section 5 of the Limitation Act gives courts the power to accept appeals or applications even after the deadline-if there’s a genuine reason for the delay. It’s like a legal safety valve that ensures a person isn’t denied justice just because they missed a procedural timeline.

But this relief isn’t automatic. The person must convince the court that the delay was due to a “sufficient cause” and not due to carelessness. The law also accepts that if someone was misled by a court’s order, judgment, or practice while calculating the limitation period, that too can be a valid reason for delay.

This provision reflects the principle that substance should prevail over mere technicalities, especially in deserving cases.

Conflict with Section 107(4) of the CGST Act

In contrast, Section 107(4) of the CGST Act reads:

Section 107(4): “(4) 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, þThis provision limits theAppellate Authority power to condonea delay of only up to one additional month, i.e.,3 months + 1 month max., if sufficient cause is shown.

This uses restrictive language:

Enter Section 29(2) of the Limitation Act – The Bridge (or the Barrier)?

“29. Savings.- ………….

(2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.”

Interpretation:

Section 29(2) allows Sections 4 to 24 of the Limitation Act-including Section 5-to apply to special laws unless expressly or impliedly excluded.

This section plays a pivotal role in determining whether Section 5 can be invoked in GST appeals. The debate hinges on whether Section 107(4) of the CGST Act expressly or impliedly excludes the application of Section 5.

Judicial Divide on Condonation of Delay Beyond 3+1 Months under GST

Judgments Favoring the Department (No Further Condonation)

These judgments hold that the CGST Act provides a complete code for limitation and Section 5 of the Limitation Act is excluded:

Aspect

Case Title

Addichem Speciallity LLP vs. Special Commissioner [2025(02)LCX0009]

Baiju George vs. Commissioner Of Goods And Service Taxes [2024(11)LCX0277]

Sujeet Jaiswal [2021(01)LCX0299]

Authority

Delhi High Court

Kerala High Court

Chattisgarh High Court

Facts of the Case

The petitioner filed an appeal under Section 107 of the CGST Act beyond the extended period of 3 months plus 1 month. The Appellate Authority rejected the appeal as time-barred. The petitioner approached the High Court seeking relief despite the statutory delay.

The petitioner filed appeals under

Section 107 of the CGST/SGST Acts nearly 4 years after the assessment orders were passed under Section 62. He cited health issues (fatty liver) as the cause for the delay. The Appellate

Authority dismissed the appeals as time-barred. The petitioner sought relief under Article 226.

The petitioner filed appeal under Section 107 of the GST Act on 21.05.2019 against the order dated 15.10.2018 imposing penalty invoking the provisions of Section 129(1)(b) of the GST Act, 2017. The appeal was rejected on the ground of limitation.

Issue

Whether the delay in filing a GST appeal beyond the additional 1month period prescribed under Section 107(4) can be condoned by invoking Section 5 of the Limitation Act.

Whether extraordinary medical reasons and the constitutional powers of the High Court justify condoning delay in GST appeals beyond the maximum period prescribed under Section 107(4).

Whether appeal filed beyond prescribed limitation period and condonation beyond 30 days permissible.

Observations

➢ The Court held that Section 107(4) provides a complete limitation scheme by prescribing a 3-month period to file an appeal and allowing only a further 1-month delay to be condoned.

➢ The provision does not contemplate any further condonation, nor does it refer to factors like “sufficient cause.”

➢ The Court emphasized that this express exclusion of discretionary elements triggers the operation of Section 29(2) of the Limitation Act, thereby rendering Section 5 inapplicable.

➢ It was held that the legislative intent to fix a strict time cap must be respected, and even constitutional powers under Article 142 cannot override this limitation.

➢ The Gujarat High Court relied on:

➢ These cases reaffirm that where a special statute lays down a specific and capped limitation period, general provisions of the Limitation Act stand excluded.

➢ The Court held that Section 107(4) creates a strict limitation regime that allows only a 3-month appeal period plus a further 1-month extension.

➢ A delay of 4 years is inordinate and cannot be condoned either by the appellate authority or by invoking constitutional powers, except in truly exceptional cases.

➢ The petitioner’s reasons were not backed by compelling evidence.

➢ The Court distinguished this case from Karuvannur Service Co-operative Bank Limited v. AC, stating it involved special facts.

➢ Appeal must be filed within 3 months + 30 days; no power to condone delay beyond this period.

➢ Appellate authority becomes functus officio after 4 months (3 months + 1 month condonation).

➢ The HC relied on several Supreme Court Judgements in the case of M/s N.V. International vs. State of Assam (Arbitration Act) & Assistant Commissioner (CT) LTU, Kakinada & Ors. v. Glaxo Smith Kline Consumer Health Care Limited.- no condonation beyond statutory limit.

Ruling/ Verdict

➢ In summary, the power to condone delay in pursuing a statutory remedy depends entirely on the governing statute.

➢ Where a statute-such as Section 107(4) of the CGST Act-creates a special and self-contained limitation regime and expressly bars appeals after a terminal date, the general provisions of the Limitation Act, including Section 5, cease to apply.

➢ Since the petitioner’s appeal was filed beyond the prescribed limitation (3 months + 1 month), the writ petition was held to be meritless and accordingly dismissed.

➢ The High Court dismissed the writ petition, ruling that the appeal was hopelessly timebarred.

➢ The constitutional remedy under Article 226 is discretionary and cannot be used to bypass a clear statutory limitation unless extraordinary hardship or injustice is evident.

Appeal dismissed as barred by limitation; no interference with impugned order

Key Takeaway-

Judgments Favoring the Assessee (Further Condonation Allowed)

Other High Courts have adopted a liberal view, holding that Section 5 can be invoked unless there is clear exclusion:

Aspect

Case Title

Mukul Islam [2024(05)LCX0265]

S K Chakraborty & Sons [2023(12)LCX0372]

Tvl Chennais Pet [2025(02)LCX0309]

Authority

Calcutta High Court

Calcutta High Court

Madras High Court

Facts of the Case

The petitioner challenged the rejection of an application for condonation of delay in filing an appeal under Section 107 of the West Bengal GST Act, 2017. The appeal was filed beyond the prescribed period, along with an application under Section 5 of the Limitation Act, 1963. The appellate authority rejected the application on the ground that the delay exceeded the statutory limit of four months.

The petitioner filed an appeal under Section 107 of the WBGST Act, which was delayed beyond the permissible period under the proviso to Section 107(4). The appellate authority rejected the appeal on the ground of limitation.

The petitioner challenged an order dated 15.07.2024 reversing Input Tax Credit (ITC) for FY 2019–20. The notice was uploaded under the “additional notices” tab of the GST portal, which the petitioner's consultant missed. The petitioner became aware of the order only on 16.11.2024, after its bank account was attached. The petitioner filed an appeal on 20.11.2024, with a 35-day delay and a pre-deposit of 10% tax liability. An additional 15% of the disputed tax was later deposited. The appellate authority rejected the appeal on 03.01.2025 for exceeding the condonable delay period by 5 days.

Issue

Whether the appellate authority erred in refusing to condone the delay beyond the outer limit under Section 107(4) of the WBGST Act, and whether Section 5 of the Limitation Act is applicable in such cases.

Whether Section 5 of the Limitation Act are attracted to the appeal filing period of limitation prescribed under Section 107 of the Act of 2017 or not.

Rejection of appeal under Section 107(4) of the CGST Act due to delay beyond condonable limit by 5 days.

Observations

➢ The Court observed that Section 5 of the Limitation Act applies to GST appeals in the absence of express or implied exclusion, supported by Section 29(2) of the Limitation Act.

➢ The appellate authority has jurisdiction to condone delay beyond the outer limit mentioned in Section 107(4).

➢ The rejection by the appellate authority amounted to a failure to exercise jurisdiction.

➢ Reliance was placed on the Division Bench ruling in S.K. Chakraborty & Sons v. Union of India and the Supreme Court’s interpretation in Superintending Engineer/Dehar Power House Circle Bhakra Beas Management Board (PW) Slapper and another versus Excise and Taxation Officer Sunder Nagar/Assessing Authority.

➢ The Court held that in the absence of an express exclusion, Section 5 of the Limitation Act applies to appeals under the WBGST Act.

➢ The proviso to Section 107(4) cannot be construed as an absolute bar against condonation beyond one month.

➢ The Court held that the appellate authority had jurisdiction to condone delay even beyond the fourmonth cap, by applying Section 5 of the Limitation Act.

➢ Acknowledged that the second respondent acted correctly as per the CGST Act by rejecting the appeal due to delay beyond 1 month (35 days delay = 5 days beyond the condonable limit).

➢ However, the Court held that substantial compliance (payment of 25% of tax) and the circumstances of the case justified condonation in the interest of justice.

➢ Hence, it remanded the matter for a decision on merits, overriding the statutory limitation.

Ruling/ Verdict

➢ The Calcutta High Court set aside the appellate authority’s order dated 27th March 2024.

➢ It held the delay was sufficiently explained and condoned the same.

➢ The appeal was restored and the appellate authority was directed to hear and dispose of the appeal on merits within two months.

➢ The Court set aside the orders of the learned Single Judge in the two writ petitions, as well as the orders of the Appellate Authority impugned therein.

➢ The Appellate Authority was requested to consider and decide the application for condonation of delay on merits. If the explanations advanced are found sufficient, the delay may be condoned, and the appeals are to be heard and disposed of on merits.

➢ The High Court set aside the order dated 03.01.2025 rejecting the appeal.

➢ The matter was remanded to the appellate authority for fresh consideration on merits.

➢ The authority was directed to dispose of the appeal within two months.

➢ The writ petition was allowed and connected miscellaneous petitions were closed.

Legal Takeaway:

Conclusion: What’s the Final Word?

This creates inconsistency and legal uncertainty, especially for taxpayers operating in multiple states.

Practical Tip for Taxpayers

Way Forward: Need for Supreme Court or Legislative Clarification

The divergent judicial interpretations on whether appellate authorities under GST can condone delay beyond the statutory 3+1 month limit under Section 107(4) have created legal uncertainty for taxpayers. While some High Courts have shown willingness to apply Section 5 of the Limitation Act, others have firmly held that the time limit is non-negotiable.

What is urgently needed is either a clear pronouncement from the Supreme Court to settle the issue once and for all, or a legislative amendment to the CGST Act explicitly clarifying whether or not the Limitation Act applies to such appeals.

Until then, taxpayers are best advised to exercise caution and file appeals strictly within the prescribed 3month period and the additional 1-month condonable window. Relying on equitable relief at a later stage could prove both uncertain and costly.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.