Facts of the Case

The petitioner, Tvl. Amman Arul Spinners, was issued a Show Cause Notice dated 25.11.2024, pointing out certain discrepancies and proposing the imposition of tax, penalty and interest. According to the petitioner, the opportunity to respond could not be availed because the person entrusted with the work did not inform the petitioner due to non-verification of the GST portal.

Consequently, an ex-parte assessment order dated 24.02.2025 was passed. Thereafter, the assessing authority itself rectified the order by a rectification order dated 20.03.2025, whereby certain parts of the order were varied.

In relation to the remaining aspects, the petitioner filed a further rectification application on 28.03.2025, within eight days of the rectification order. However, the said rectification request remained pending for almost one year and was ultimately rejected by order dated 04.03.2026.

Thereafter, the petitioner filed an appeal on 12.03.2026. The appellate authority, by order dated 27.03.2026, rejected the appeal as being beyond the permissible time limit. The petitioner therefore approached the High Court under Article 226 of the Constitution of India, seeking quashing of the appellate rejection order and restoration of an opportunity to contest the matter on merits.

Issues Involved

The principal issues before the High Court were:

  1. Whether the rejection of the petitioner’s GST appeal as time-barred under the limitation framework prescribed by Section 107 of the GST Act warranted interference under Article 226 in the peculiar facts of the case.
  2. Whether the period during which the petitioner’s rectification application remained pending before the authority should be taken into consideration while examining the delay in filing the appeal.
  3. Whether the petitioner deserved a fresh opportunity where the original assessment had been passed ex-parte, the authority itself had subsequently rectified the assessment order, and the petitioner’s further rectification application remained undecided for almost one year.
  4. Whether equitable relief could be granted subject to an additional deposit of the disputed tax amount.

Petitioner’s Arguments

The petitioner submitted that the opportunity to respond to the Show Cause Notice could not be availed due to the circumstances explained in the affidavit, particularly because the person entrusted with the GST-related work failed to inform the petitioner owing to non-verification of the portal.

It was argued that the petitioner had not remained inactive. After the ex-parte assessment order dated 24.02.2025, the assessing authority itself passed a rectification order dated 20.03.2025. The petitioner thereafter filed a further rectification application on 28.03.2025 concerning the remaining aspects.

The petitioner contended that, while expecting the assessment order to be rectified, immediate steps to file an appeal were not taken. The rectification application was eventually rejected only on 04.03.2026, after which the petitioner promptly filed the appeal on 12.03.2026.

The petitioner further argued that at least the period between filing the rectification application and passing the order rejecting that application should be taken into account while considering the delay.

Respondents’ Arguments

The learned Government Advocate appearing for the respondents submitted that Section 107 categorically prescribes the limitation period as well as the outer limit for condonation of delay.

It was contended that whenever the statute prescribes an outer condonable limit, such limitation is mandatory. Since the petitioner’s appeal had been filed beyond the permissible period, the appellate authority had rightly rejected it.

The respondents further argued that the petitioner had consciously chosen to pursue a rectification application even though the statutory remedy of appeal was available as early as 2025. Therefore, according to the respondents, the delayed appeal could not be entertained beyond the statutory limitation framework.

Court Order / Findings

The High Court considered the rival submissions and examined the material records. The Court took particular note of the following circumstances:

  • the assessment order dated 24.02.2025 was passed ex-parte;
  • the petitioner had not slept over its rights;
  • the respondent authority itself rectified the assessment order on 20.03.2025;
  • the petitioner filed the further rectification application within eight days, on 28.03.2025; and
  • the authority took almost one year to reject the rectification application, ultimately passing the rejection order only on 04.03.2026.

Considering these facts cumulatively, the High Court held that the petitioner deserved an opportunity to have the matter reconsidered.

However, the Court made such relief conditional upon the petitioner depositing 25% of the disputed tax amount. Since the petitioner had already deposited 10% at the time of filing the appeal, the Court directed payment of the balance 15%.

The writ petition was accordingly ordered on the following terms:

  1. The petitioner shall, within four weeks from the date of receipt of a web copy of the order, deposit the balance 15% of the disputed tax amount.
  2. Upon such deposit:
    • the assessment order dated 24.02.2025;
    • the rectification order dated 20.03.2025; and
    • the impugned appellate order dated 27.03.2026

shall stand set aside.

  1. The matter shall stand remitted to the file of the second respondent, namely the State Tax Officer.
  2. The petitioner shall appear before the respondent without fail and submit its reply and supporting documents.
  3. The respondent shall consider the matter afresh and pass orders in accordance with law.
  4. Since the impugned assessment order was set aside, any attachment of the petitioner’s bank account made pursuant to the impugned order shall stand raised.
  5. No costs were awarded, and the connected miscellaneous petitions were closed.

Important Clarification

The judgment is significant because the High Court granted relief despite the appellate authority’s objection based on the statutory limitation framework under Section 107 of the GST Act. The relief was based on the specific factual circumstances that the assessment was ex-parte, the petitioner had actively pursued rectification, the authority itself had earlier rectified the assessment order, and the petitioner’s further rectification application remained pending for almost one year.

The Court did not lay down a general proposition that every appeal filed beyond the outer limitation period under Section 107 must be entertained. Rather, the order reflects the exercise of writ jurisdiction under Article 226 of the Constitution of India in the peculiar facts of the case and balances the equities by imposing the condition of a total 25% deposit of disputed tax, including the 10% already deposited.

A further important consequence of the order is that, upon compliance with the balance 15% deposit condition, not merely the appellate rejection order but also the underlying assessment and rectification orders stand set aside, enabling a fresh adjudication on merits. Additionally, any consequential bank account attachment pursuant to the impugned assessment stands raised.

Sections

Section 107 of the GST Act – Statutory appeal, prescribed limitation period and outer condonable limit for delayed appeals.

Article 226 of the Constitution of India – Extraordinary writ jurisdiction of the High Court to examine the legality and fairness of administrative and quasi-judicial action.


Link to download the order -

https://www.mytaxexpert.co.in/uploads/1783065604_409.pdf

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