Rajasthan High Court Condones 160-Day GST Appeal Delay — Constitutional Powers Under Article 226 Not Fettered by Section 107 of CGST Act
Case Overview: M R Traders Vs Union of India
The Rajasthan High Court recently delivered a significant ruling in M R Traders Vs Union of India, addressing a pivotal question in GST jurisprudence — whether the expiry of the statutory limitation period under Section 107 of the Central Goods and Services Tax Act, 2017 prevents a High Court from exercising its constitutional jurisdiction under Article 226 of the Constitution of India to condone delay and restore a cancelled GST registration.
The Court answered this question in favour of the assessee, setting aside the appellate order dated 11.10.2024 and condoning a delay of 160 days in filing the statutory appeal, thereby remanding the matter to the appellate authority for fresh adjudication on merits.
Background and Facts of the Case
The Assessee's Business and GST Compliance Setup
M R Traders, a registered proprietor firm under the provisions of the Central Goods and Service Tax Act, 2017 and Rajasthan Goods and Service Tax Act, 2017, was engaged in executing works contracts along with wholesale and retail trade. From Financial Year 2021-22 onwards, the assessee opted for filing quarterly GST returns under Section 39(1) of the CGST Act, 2017.
Given the complexity of GST compliance requirements, the assessee had engaged an accountant/local advocate to manage all GST-related obligations on a regular basis. This professional was entrusted with ensuring timely filing of returns and other statutory compliances right from the firm's inception.
Show Cause Notice and Cancellation of Registration
On 15.01.2023, a Show Cause Notice was issued by the revenue authorities proposing cancellation of the GST registration on the ground that the assessee had not filed returns for a continuous period of six months. Simultaneously, the GST registration was suspended with effect from 15.01.2023.
The assessee's accountant/local advocate failed to respond to the notice within the stipulated period. Consequently, on 09.03.2023, an Order-in-Original was passed cancelling the GST registration of the assessee with retrospective effect from 01.04.2022.
Delay in Filing the Statutory Appeal
The assessee became aware of the cancellation order and, upon engaging a new legal consultant, filed an appeal before the appellate authority in Form GST APL-01 on 18.12.2023 under Section 107 of the CGST Act, 2017.
However, as per the statutory scheme under Section 107, the appeal ought to have been filed within three months from the date of communication of the order, i.e., from 09.03.2023, with a further discretionary extension of one additional month upon showing sufficient cause. The appeal filed on 18.12.2023 carried a delay of approximately 160 days beyond the maximum permissible period.
The primary reasons cited for the delay were:
- Bona fide reliance on the accountant/local advocate who was trusted with all compliance responsibilities
- Lack of communication and proper advisory between the assessee and the consultant
- Personal hardship arising from the prolonged illness of the assessee's (Shri Jagdish's) father, which prevented close monitoring of the compliance status
- The assessee's limited understanding of GST procedural requirements
Upon becoming aware of the cancellation and available legal remedies, the assessee promptly appointed a fresh legal consultant and immediately filed the appeal on 18.12.2023.
Dismissal of Appeal by the Appellate Authority
The appellate authority vide its order dated 11.10.2024 (uploaded on the portal on 19.11.2024) dismissed the appeal solely on the ground that it was barred by the limitation prescribed under Section 107 of the CGST Act, 2017, without examining the merits of the cancellation.
Arguments Advanced by the Assessee
Counsel for the assessee raised the following contentions before the Rajasthan High Court: