Allahabad High Court sends back GST appeal rejected for limitation without considering condonation reasons

Background of the dispute

The matter before the Allahabad High Court arose from proceedings initiated under the Goods and Services Tax laws against E3 Edgeband Industries Pvt Ltd, a registered dealer engaged in the supply of products such as aluminium cable, main panels, bus bar boxes, lamination dryer rubber/steel boxes and PVC strips. The firm had regular business dealings with M/s J.S.S. Distributors, Pune, which used to procure material from it.

During the normal course of business, M/s J.S.S. Distributors returned certain PVC strips to E3 Edgeband Industries Pvt Ltd. The goods were accompanied by a tax invoice and a valid e-way bill. The transaction details were as under:

  • Tax Invoice dated 24.04.2024 for Rs. 6,74,688/-
  • IGST charged: Rs. 1,21,443=84
  • E-way bill No. 291754041449, generated on 26.04.2024

The consignment was being transported in Vehicle No. DL 1 MA 1725 when it was intercepted by the mobile squad authorities on 14.05.2024.

Inspection, seizure and penalty proceedings

Interception and verification

Upon interception by respondent no. 3 (the State Tax Mobile Squad Unit), the driver of the vehicle produced the tax invoice and e-way bill for verification. Following standard enforcement procedure, the authorities:

  • Recorded the driver’s statement in MoV-01
  • Prepared an interception memo in MOV-02, both documents dated 15.05.2024
  • Conducted a detailed physical verification of the goods, culminating in a physical verification report (MOV-04) dated 16.05.2024

Seizure and penalty under Section 129

Based on the verification, the authority proceeded to pass a seizure order on 16.05.2024. Subsequently:

  1. A notice under Section 129 of the relevant GST enactment was issued.
  2. The authority imposed a penalty of Rs. 2,42,888/- under Section 129(1)(a) on 16.05.2024.

The assessee, while disputing the legality of the action, deposited the penalty amount under protest in order to secure release of the goods and avoid further business disruption.

Appeal before the first appellate authority and limitation issue

Statutory appeal period under Section 107

Against the penalty order dated 16.05.2024 passed by the adjudicating authority, the assessee had a statutory right of appeal under Section 107 of the Act. The provision allows:

  • A normal limitation period of 90 days from the date of communication of the order; and
  • An additional condonable period of 30 days at the discretion of the appellate authority.

Thus, the outer limit of 120 days from the date of service of the impugned order constitutes the maximum permissible period within which an appeal can be entertained by the appellate authority.

In this case, the penalty order was passed and served on 16.05.2024, and accordingly:

  • The 90-day period expired around mid-August 2024.
  • Including the further 30 days condonable period, the outer limit expired on 15.09.2024.

Filing of appeal and delay condonation application

The assessee filed an online appeal before respondent no. 2 (Additional Commissioner, Grade-II (Appeals-2), Commercial Tax/State Tax, Noida) on 27.09.2024. Alongside the appeal, the assessee also submitted a detailed application seeking condonation of delay supported by an affidavit.

As there was a delay of about 12–13 days beyond the maximum condonable limit, the assessee sought to justify this delay by placing specific facts and circumstances before the appellate authority.

Reasons put forth for the delay

In the condonation application and supporting affidavit, the Managing Director of E3 Edgeband Industries Pvt Ltd explained the sequence of events as follows:

  • After the penalty order under Section 129(3) was passed on 16.05.2024 by the **A.C.