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

The Hon’ble Karnataka High Court in the case of M/S. SREE KRISHNA HOT DIP GALVANIZERS VERSUS STATE OF KARNATAKA, THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT) , TUMKUR, THE COMMISSIONER OF COMMERCIAL TAXES (KARNATAKA) , THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) -3 - 2024 (2) TMI 590 - KARNATAKA HIGH COURTheld 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 M/S. SREE KRISHNA HOT DIP GALVANIZERS VERSUS STATE OF KARNATAKA, THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT) , TUMKUR, THE COMMISSIONER OF COMMERCIAL TAXES (KARNATAKA) , THE JOINT COMMISSIONER OF COMMERCIAL TAXES (APPEALS) -3 - 2024 (2) TMI 590 - KARNATAKA HIGH COURT 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 THE COMMISSIONER OF CENTRAL EXCISE, VISAKHAPATNAM-II VERSUS M/S. CAIRN ENERGY INDIA PTY. LIMITED. - 2014 (11) TMI 451 - ANDHRA PRADESH HIGH COURTwherein 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.

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