COVID Limitation Orders and Their Impact on GST Appeals: Gujarat High Court’s Ruling in Marvin Enterprise

The Gujarat High Court in Marvin Enterprise vs State of Gujarat & Ors. has clarified a crucial procedural aspect under GST law: the extension and exclusion of limitation granted by the Hon’ble Supreme Court during the COVID-19 period applies squarely to appeals filed under Section 107 of the CGST Act, 2017.

This decision carries significant implications for assessees whose GST appeals were either rejected or are at risk of rejection as time-barred, despite being filed shortly after the COVID-19 disruption phase.

Background of the Case

Parties and Business Profile

  • The writ petition was filed by Marvin Enterprise, a proprietary concern engaged in the business of trading in chemical products.
  • The concern was duly registered with the Gujarat Goods and Service Tax Department with effect from 15.06.2020.
  • The respondents were State of Gujarat & Ors., including the GST authorities tasked with adjudication and appellate functions under the CGST Act, 2017.

GST Registration Cancellation

  1. The assessee received a show-cause notice in Form GST REG-17/31 dated 15.12.2021, alleging that:
    • Invoices were issued without actual supply of goods and/or services, and
    • Such conduct was in violation of provisions of the CGST Act, 2017.
  2. The assessee submitted a reply dated 20.12.2021, contesting the allegations and seeking to justify its transactions.
  3. Despite the reply, the proper officer passed an order dated 01.01.2022, cancelling the GST registration of Marvin Enterprise.

Appeal Before the Appellate Authority

  • The assessee preferred an appeal in Form GST APL-01 on 06.06.2022 under Section 107 of the CGST Act, 2017, challenging the cancellation of registration.
  • The primary contention in the appeal was that:
    • Necessary documents existed to establish the genuineness of purchases, and
    • Cancellation of registration was not warranted on facts and law.

However, the Appellate Authority rejected the appeal by Order-in-Appeal dated 19.04.2024, not on merits, but solely on the ground of limitation, holding that the appeal was filed beyond the maximum condonable period of four months prescribed under Section 107(1) and Section 107(4).

Whether the appeal filed by Marvin Enterprise on 06.06.2022 was barred by limitation under Section 107(4) of the CGST Act, 2017, ignoring the exclusion of the COVID-19 period directed by the Supreme Court?

The entire dispute centered around the interplay between:

  • The statutory appeal period under Section 107, and
  • The suo motu orders of the Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 – In Re: Cognizance For Extension Of Limitation, particularly the order dated 10.01.2022.

Statutory Framework: Section 107 of the CGST Act

Appeal to Appellate Authority – Key Extract

Section 107 of the CGST Act, 2017 provides as follows:

“107. Appeals to Appellate Authority.-
(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.
...
(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, allow it to be presented within a further period of one month.”

Effect of Section 107

  • The normal limitation period for filing an appeal by an assessee is three months from the date of communication of the order (Section 107(1)).
  • The Appellate Authority is empowered to condone delay of a further one month beyond three months, if sufficient cause is shown (Section 107(4)).
  • In aggregate, an appeal can be entertained within a maximum period of four months (120 days), beyond which the authority has no statutory discretion to condone the delay.

The Appellate Authority, in Marvin Enterprise’s case, took the view that counting from 01.01.2022, the appeal of 06.06.2022 exceeded the outer limit of 120 days and was, therefore, non-maintainable.

Supreme Court’s Suo Motu COVID Limitation Orders

Suo Motu Writ Petition (C) No. 3 of 2020

During the COVID-19 pandemic, the Supreme Court, in **Suo Motu Writ Petition (C) No.