Not To Be Included In Limitation Period Calculation Time Spent On GST Appeal To Wrong Authority.

Sree Krishna Hot Dip Galvanizers Vs State of Karnataka (Karnataka High Court)

Time spent in filing an appeal before the wrong authority is to be excluded while computing the limitation period

In the recent case of Sree Krishna Hot Dip Galvanizers v. State of Karnataka, the Karnataka High Court delivered a significant ruling regarding the exclusion of time spent in filing appeals before the wrong authority from the computation of the limitation period. The Karnataka High Court held that the time spent in preferring appeal before the wrong authority should be excluded while computing limitation period.

Facts:

Sree Krishna Hot Dip Galvanizers (“the Petitioner”) was aggrieved by the Penalty Order dated September 14, 2022 (“the Impugned Order”) passed by the Revenue Department (“the Respondent-1”). The Petitioner preferred an appeal before the Respondent-1 where they were of bonafide impression that it was the Appellate Authority. Subsequently, the Appellant realised that the appeal was preferred before the wrong forum and consequently, the Petitioner preferred one more appeal on June 27, 2023 before the Appellate Authority (“the Respondent 2”) and sought for the extension for the time under the Section 14 of the Limitation Act, 1963 (“the Limitation Act”). In addition, thereto, the Petitioner placed reliance upon the Notification issued by the Central Board of Indirect Taxes and Customs (“CBIC”) dated November 02, 2023, which extended the time for preferred appeals up to January 31, 2024. Under these circumstances, the Respondent-2 committed an error in issuing the Endorsement dated August 19, 2023 (“the Impugned Endorsement”) summarily dismissing the appeal as barred by the limitation, and the same deserved to be set aside.

Hence, aggrieved by the Impugned Endorsement, the Petitioner has filed the present wit petition.

Issue:

Whether the time spent in filing an appeal before the wrong authority to be excluded while computing the limitation period?

Held:

The Hon’ble Karnataka High Court in Writ Petition No. 25648 of 2023 held as under:

Directed that, the appeal filed by the Petitioner must be considered on merits and pass an appropriate order in accordance with law without reference to the issue of limitation.

Observed that, as per the Notification issued by the CBIC, the period prescribed for preferring the appeal was been extended up to January 31, 2024. On this ground, the Respondent committed an error in issuing the Impugned Endorsement which was required to be set aside, quashed and necessary directions are to be issued to the Respondent to consider the appeal on merits without reference to the issue/question of limitation which stands concluded in favor of the Petitioner.

Hence, the writ petition was allowed and the Impugned Endorsement was set aside.

Our Comments:

Section 107 of the CGST Act talks about “Appeal to Appellate Authority”. According to Section 107(1) of the CGST Act, any person aggrieved by any decision or order passed under the CGST Act or the SGST Act or the UTGST 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.

In Pari Materia case of Commissioner of Central Excise, Visakhapatnam-II Vs. Cairn Energy India Pvt. Ltd. [C.E.A. No. 48 dated October 08, 2014] wherein the Hon’ble Andhra Pradesh High Court held that the time spent in pursuing remedy before the wrong forum is excludible in determining the period of limitation.

Hence, in the present case the Hon’ble Karnataka High Court has rightly held that time spent filing an appeal before wrong authority is to be excluded while computing the limitation period.

Conclusion: In light of the foregoing analysis, the Karnataka High Court allowed the writ petition, setting aside the impugned endorsement and directing the Appellate Authority to consider the appeal on its merits without reference to the issue of limitation. This ruling not only clarifies the legal stance on such matters but also underscores the importance of careful consideration in choosing the appropriate forum for appeals. This case serves as a precedent for similar situations, highlighting the need for diligence in legal proceedings and offering clarity on the exclusion of time spent in filing appeals before wrong authorities from limitation periods.

Full Text Of The Judgment/Order Of Karnataka High Court

In this petition petitioner is aggrieved by the impugned Endorsement in Annexure - J dated 19.08.2023 issued by the respondents whereby the appeal preferred by the petitioner under Section 107 of the CGST / KGST Act, 2017 was dismissed by the respondents on the ground of the limitation.

2. Heard learned counsel for the petitioner and learned HCGP for respondents and perused the material on record.

3. The material on record discloses that aggrieved by the impugned penalty order dated 14.09.2022 passed by the second respondent under the petitioner preferred an appeal before the second respondent in the bonafide / wrong impression that it was the Appellate Authority. It is the contention of the petitioner that subsequently he realized that the appellate authority was actually the respondent No.4 and not the respondent No.2 as a result of which the appeal preferred before the respondent No.2 was before the wrong forum and consequently the petitioner preferred one more appeal on 27.06.2023 before the fourth respondent and sought for extension of time under Section 14 of the Limitation Act. In addition thereto, the petitioner places reliance upon the notification issued by the Government of India by the Central Board of Indirect Taxes (CBIT) and Customs dated 02.11.2023 which extends the time for preferred appeals up to 31.01.2024. Under these circumstances, it is contended that the respondent committed an error in issuing impugned endorsement summarily dismissing the appeal as barred by limitation and the same deserves to be set aside.

4. Per contra, learned HCGP submits that in the light of the undisputed fact that the petitioner had preferred the instant appeal before the fourth respondent only on 27.06.2023 beyond the prescribed period of 120 days (90 + 30) the respondent was justified in dismissing the appeal as barred by limitation by passing the impugned orders which does not warrant interference in the present petition.

5. A perusal of the impugned endorsement issued by the respondent will indicate that the sole ground on which the appeal was dismissed was as being barred by limitation in the light of the prescribed period contained in Section 107 of the KGST Act, 2017. While it is true that Section 29(2) of the Limitation 1963 excludes the applicability of Section 5 of the Limitation Act for the purpose of condonation of delay is concerned, Section 14 of the Limitation Act which excludes time spent before a wrong / incorrect forum for the purpose of concluding the prescribed period is applicable to an appeal preferred under Section 107 of the KGST Act in the light of the judgment of the Hon’ble Division Bench in the case of DEPUTY COMMISSIONER AND SPECIAL

ACQUISITION OFFICER, BANGALORE v/s M/s. S.V GLOBAL MILL LIMITED.

6. It is also necessary to point out that as per circular issued by the CBIT, the period prescribed for preferring the appeal has been extended up to 31.01.2024 and on this ground also, respondent committed an error in issuing the impugned endorsement which deserves to be set aside, quashed and necessary directions are to be issued to the respondent to consider the appeal on merits without reference to the issue/question of limitation which stands concluded in favour of the petitioner.

7. In the result, I pass the following

ORDER

(i) The petition is hereby allowed

(ii) Impugned endorsement dated 19.08.2023, is hereby set aside

(iii) The respondent No.4 - Appellate Authority is directed to consider the appeal filed by the petitioner on merits and pass appropriate orders in accordance with law without reference to the issue/question of limitation which stands concluded in favour of the petitioner under this order.