Once cause shown as indicated u/s 107(4) of CGST Act, delay in filing of appeal merits condonation irrespective of its duration

Hearing a petition contesting dismissal of the Petitioner’s appeal under the CGST Act 2017, on grounds of not filing appeal within the prescribed limitation period, the High Court of Andhra Pradesh observed that the right of appeal created under statute, is a substantive right of the party that could not be denied by taking a pedantic view.

A Division Bench of Justice U Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa observed that the delay in filing appeal was within the extended period in which delay could be condoned by the Appellate Commissioner.

The Bench also found the Petitioner to have furnished reasonable cause for delay in filing appeal, namely that the Petitioner’s bank account had been frozen and placed under attachment by the Department, on account of which the Petitioner had been delayed in making the mandatory pre-deposit of 10% of the tax demand raised, as is mandated under sub-section (7) of Section 10 of the CGST Act 2017.

The Petitioner-Assessee was represented by V Siddharth Reddy, Advocate, whereas the Respondent-Revenue was represented by the Government Pleader.

The Petitioner had filed appeal with a delay of 25 days after expiry of three months of statutory period of limitation for filing appeal before Commissioner. The explanation given was that the Petitioner was unable to pay the 10% of disputed tax as pre-deposit which is required to file the appeal since their bank account was frozen and the Input Tax Credit was blocked.

However, the Commissioner (Appeals) opined that the reasons are not convincing and, therefore, refused to condone the delay and rejected the appeal.

On considering the contentions of both parties, the Bench observed it to be a relevant fact to be noted that the Petitioner had been delayed in making the mandatory pre-deposit of 10% of the tax demand raised, on account of the Petitioner’s bank account having been frozen by the Department.

Relying on the decision of the Supreme Court in Collector, Land Acquisition Vs. Mst. Katiji the Bench observed that when considering an application for Condonation of Delay, it is not the length of the delay, but cause for delay which would be paramount consideration. If the cause shown as indicated under Section 107(4) of the act, such delay deserved to be condoned irrespective of the length of the delay.

 It did not mean that the Commissioner (Appeals) could condone the delay beyond the condonable period that is one month after expiry of three months after statutory period of three months, the Bench noted.

In respect of the present matter, the Bench observed that the view adopted by the Commissioner (Appeals) appeared to be “…forcing the horse to run after tying the legs…”.

The Bench further observed that the right of appeal which is created under statute is a substantive right of the party that cannot be denied by taking pedantic view. The Bench found no merit in the reasons recorded by the Commissioner (Appeals) for dismissing the appeal.

With these observations, the Bench quashed the appellate order dismissing the Petitioner’s appeal.

Cause Title: SA Iron & Metal vs. Assistant Commissioner (ST) [W.P No. 15490 of 2023 / 2023-Enterslice-11-HC-Andhra Pradesh-GST]

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