Rajasthan HC Directs Appellate Authority to Hear Time-Barred GST Appeal on Merits: Khandelwal Decor World vs Union of India

Case Overview

The Rajasthan High Court recently disposed of a writ petition filed by Khandelwal Decor World against an Order-in-Original raising a GST demand, directing the Appellate Authority to receive and decide the delayed appeal on its substantive merits. The Court found that the 125-day delay in filing the statutory appeal arose from circumstances entirely outside the assessee's control — principally, the absence of effective communication of the adjudication order and the manner in which recovery proceedings came to the assessee's attention only months after the order was passed.

Background and Factual Matrix

The Demand Order

The Deputy Commissioner, State Tax, Circle-G, Zone III, Jaipur, passed an Order-in-Original dated 19.12.2025 for Financial Year 2021-22. The order raised a demand of Rs. 17,85,532/- against the assessee on the ground that there existed an alleged discrepancy between the Input Tax Credit utilised and the cash payment ratio, as reflected in the data available on the common GST portal.

The Show Cause Notice Proceedings

Prior to the order, a Show Cause Notice dated 09.09.2025 was issued. The assessee submitted a detailed reply dated 09.10.2025 and specifically requested the adjudicating authority to grant an opportunity of personal hearing before any final determination was made.

Despite this express request, the record indicates that no effective opportunity of personal hearing was extended to the assessee. The adjudicating authority proceeded to pass the Order-in-Original dated 19.12.2025 in an ex parte manner, without affording the assessee a meaningful chance to present its position — a course of action that the assessee characterised as a violation of the principles of natural justice.

How the Assessee Learned of the Order

The assessee did not receive any formal or direct communication of the Order-in-Original. The order was merely uploaded on the GST Portal without being otherwise served upon the assessee. It was only on 08.06.2026 that the assessee noticed a recovery being effected from its Electronic Credit Ledger. Upon investigating this recovery, the assessee acquired actual knowledge of the impugned order on 20.07.2026.

The assessee thereafter moved promptly to challenge the order, filing the writ petition on 21.08.2026. However, by the time legal steps could be initiated, the statutory window for filing an appeal under Section 107 of the CGST Act, 2017 had already elapsed — resulting in a delay of 125 days beyond the prescribed period.

Legal Framework: Section 107 of the CGST Act, 2017

The central statutory provision governing the appellate remedy is Section 107 of the CGST Act, 2017. The Court reproduced the relevant portion as follows: