GSTAT Hyderabad: Departmental appeals against FAA orders restoring GST registrations dismissed as infructuous

Background of the dispute

The GST Appellate Tribunal, Hyderabad, decided a batch of sixteen Departmental appeals arising from orders of the First Appellate Authority (“FAA”) in which cancelled GST registrations had been restored.

The core controversy was twofold:

  • Whether the FAA could legally condone delay in filing appeals beyond the time limits prescribed in Section 107(1) read with Section 107(4) of the CGST Act; and
  • Whether, after having implemented the FAA’s orders and restored registrations, the Department could still maintain appeals before GSTAT challenging those very orders.

All the respondents were registered assessees whose registrations had been cancelled for continuous non-filing of GSTR-3B for six months, invoking:

  • Rule 21(h) read with Rule 22(3) of the Central Goods and Services Tax Rules, 2017, and
  • Section 29(2)(c) of the CGST Act.

No applications seeking revocation of cancellation were filed within the period prescribed under Rule 23 read with Section 30. Instead, the assessees filed belated appeals under Section 107, well beyond the three-month limitation in Section 107(1) and even beyond the further one month condonable under Section 107(4).

The FAA nevertheless condoned the delays and allowed the appeals, mainly by relying on decisions of the Telangana High Court, notably:

  • M/s. Southern Enterprises v. State of Telangana, W.P. No. 2471 of 2023, and
  • M/s. Chenna Krishnama Charyulu Karampudi v. State of Telangana, (2023) 5 Centax 49 (Telangana).

Pursuant to these FAA orders, the Department:

  • Revoked the cancellations by issuing orders in Form GST REG-20;
  • Restored the registrations on the GST portal;
  • Allowed the assessees to file pending returns and discharge tax, interest, and other dues; and
  • Treated the registrations as active, enabling regular business and input tax credit flows.

Subsequently, the Department filed appeals before GSTAT Hyderabad (including APL/381/HYD/2026 in Timmasarti Venkateswara Rao Vs Wildcurse Sourcing LLP), challenging the FAA’s power to condone delay beyond the statutory outer limit.

Issues framed by the Tribunal

From the pleadings and arguments, GSTAT crystallised two principal issues:

  1. Jurisdictional issue on limitation

    • Whether the FAA had legal authority to condone delay in filing appeals beyond the aggregate four-month period (three months plus one month condonable) prescribed in Section 107(1) and Section 107(4) of the CGST Act.

  2. Maintainability and usefulness of the Departmental appeals

    • Whether the Department’s appeals could be maintained and should be entertained when:
      • the FAA’s orders had already been implemented,
      • registration cancellations had been revoked, and
      • the assessees’ registrations were live and had been acted upon for subsequent business transactions.

Additionally, arguments were advanced on:

  • The relationship between the remedy of revocation under Section 30/Rule 23 and the appellate remedy under Section 107;
  • Violations of natural justice in the cancellation orders;
  • Compliance with procedural requirements for filing appeals under Rule 111; and
  • The binding nature of decisions of the jurisdictional High Court on subordinate authorities.

Department’s contentions

Statutory limits on condonation under Section 107

The Department argued that:

  • Section 107(1) allows an appeal to the FAA to be filed within three months from communication of the order.
  • Section 107(4) authorises the FAA to condone delay only for a further period of one month, on showing sufficient cause.
  • Beyond this total outer limit of four months, the FAA has no jurisdiction to entertain an appeal or condone delay.

Therefore, any appeal filed after expiry of this outer limit was non est, and the FAA’s orders entertaining and allowing such appeals were vitiated by lack of jurisdiction.

The Department submitted that the FAA could not enlarge its powers by relying on High Court directions issued in writ jurisdiction. Those directions, it was argued, were case-specific and did not expand the statutory powers of the FAA. In support, reliance was placed on:

  • M/s. Addichem Speciality LLP v. Special Commissioner-I, Department of Trade and Taxes (Delhi High Court) – on strict adherence to statutory limitation;
  • Assistant Commissioner (CT), LTU, Kakinada v. M/s. Glaxo Smith Kline Consumer Health Care Limited, 2020 (36) GSTL 305 (SC) – on limitations governing statutory appeals; and
  • M/s. Singh Enterprises v. Commissioner of Central Excise, Jaipur – reinforcing that an appellate authority cannot condone delay beyond the maximum period fixed by statute.

Character of High Court writ orders

The Department emphasised that in M/s. Southern Enterprises v. State of Telangana and M/s. Chenna Krishnama Charyulu Karampudi v. State of Telangana, the Telangana High Court, acting under Article 226, had: