Exclusion of Time in GST Appeals: When Apparent Delay is No Delay in the Eyes of Law Section 14 of the Limitation Act and its Application to GST Litigation

Part-1.3

1.       Statutory Scheme – Section 14 of the Limitation Act

Section 14 of the Limitation Act embodies a salutary principle of justice. It protects a litigant who has been prosecuting another civil proceeding with due diligence and in good faith, but before a forum which ultimately declines to entertain the matter for want of jurisdiction or for any other cause of a like nature.

The philosophy behind Section 14 is simple. A diligent litigant should not be penalised merely because he honestly pursued his remedy before an incorrect forum.

Proceedings before a Wrong Forum – Illustrative Circumstances: -

• Filing of application for rectification,
• Filing of appeal before the wrong Appellate Commissioner,
• Filing of appeal directly to the GST Tribunal,
• Filing of writ petition in the High Court.

Section 14 of the Limitation Act, in particular sub-section (1), reads as,-

14.       Exclusion of time of proceeding bona fide in court without jurisdiction.—

(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

Explanation.—For the purposes of this section,—

(a)     in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted;

(b)     a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding;

(c)     misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction.

The statutory remedy, such as to seek rectification of the order, is in addition to the statutory remedy to file an appeal; and the limitation to seek either or both those remedies, starts running, simultaneously. In these cases, the question is not whether delay should be condoned, but whether the period spent in bonafide prosecution deserves to be excluded.

2.         Essential Conditions for Exclusion under Section 14

The benefit of Section 14 of the Limitation Act is ordinarily available where:

1. Same Matter in Issue: The subject matter of the wrong proceeding and the GST appeal must be identical (same tax period & demand).

2. Good Faith & Due Diligence: The taxpayer acted under an honest, bona fide mistake (often supported by legal advice or administrative confusion), not deliberate inaction.

3.  Lack / Defect of Jurisdiction: The earlier proceeding failed because the forum lacked jurisdiction or was otherwise unable to entertain it for a cause of a like nature.

4.  Prosecution in a “competent Forum”: The subsequent proceeding is filed before the competent forum.

In Consolidated Engineering (2008) (SC), the Hon’ble Supreme Court in Para 12 observed that following conditions must be satisfied before Section 14 can be pressed into service:

(1)     Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party;

(2)     The prior proceeding had been prosecuted with due diligence and in good faith;

(3)     The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature;

(4)     The earlier proceeding and the latter proceeding must relate to the same matter in issue; and

(5)     Both the proceedings are in a court.

Condition no. (5), relating to “proceedings in a court”, is discussed later in Para No. 7 of this Paper. Nevertheless, each case ultimately depends upon its own facts and the conduct of the litigant.

3.         Exclusion of Time is Different from Extension / Condonation

An extension of time under section 5 is distinct and different from exclusion of certain time provided under sections 12 to 24 of the Limitation Act.  The application of section 5 results in the extension of the period of limitation and cannot bring the delay within the fold of the period of limitation, whereas the application of Part III (sec 12 to 24) results in exclusion, which brings the same within the fold of the period of limitation. Therefore, section 5, on the one hand, and sections 12 to 24, on the other, operate in different fields.

Many practitioners wrongly invoke condonation where, in reality, they should first seek exclusion of time. Following distinction must always be kept in mind:

4.         Due Diligence and Good Faith are Essential

Section 14 is intended to protect a vigilant litigant—the expressions “due diligence” and “good faith” are its foundation. The taxpayer must establish: -

• continuous prosecution of the earlier proceedings;
• honest belief that the forum was competent;
• absence of negligence or deliberate inaction; and
• bonafide conduct throughout.

Wherever an application seeking rectification of apparent mistake is filed within time, the application of the underlying principle of Section 14may not be examined with a microscope any further. To the extent that application is filed “bonafide” in “good faith” and is pursued, that principle would apply. [Anandeshwar Steels (2026) (All. HC)]

5.         No Exclusion if the Original Limitation had Already Expired

Section 14 does not revive a remedy that has already become time-barred. It excludes only the period spent in bonafide prosecution before a wrong forum; it does not extend or resurrect a limitation period that has already expired.

Illustration: Under the CGST Act, both the limitation for filing an appeal and the limitation for filing a rectification application are three months. Suppose an adjudication order is communicated on 1 April. The taxpayer, instead of filing an appeal, files a rectification application only on 10 July, i.e., after the expiry of the original three-month limitation period ending on 30 June. In such a case, the taxpayer cannot claim the benefit of Section 14 because, on the date of approaching the wrong forum, the statutory period for filing the appeal had already expired.

Thus, where the original limitation has already run out before the taxpayer initiates proceedings before the wrong forum, Section 14 has no application. It excludes time from the computation of limitation; it does not revive a remedy that has already dead, that is, become barred by limitation.

6.         Time Spent in Preparation - Whether Excludable

As per Section 14(1), “the time during which the plaintiff has been prosecuting with due diligence another civil proceeding” shall be excluded. An important, but often overlooked, aspect is: when this time begins:

• Is it the date of institution of proceeding; or
• Is it the date of cause of action (original order).

For example, the order is communicated on 1April; rectification application is filed on 15 June; and order of rectification application is received on 14 August. What is the period of exclusion?

• Option A – From 15 June to 14 August;
• Option B – From 1 April to 14 August.

The correct answer is “Option B”, based upon the case laws discussed in following paras.

In the case of Tirumareddi Rajarao vs. Union of India (1963) (A.P.-HC-FB), the Hon’ble High Court observed that the period reasonably spent in preparing and prosecuting the earlier proceedings may also deserve exclusion where it forms an integral part of the bonafide prosecution of the remedy. Para 14 of the judgment states, -

“…… The time during which a party has been taking the indispensable and necessary steps preparatory to initiate the proceedings in a court should also be regarded as the time during which he has been prosecuting the civil proceeding.

Sri Ramajeyam Engineering Industries (Mad. HC):In the instant case, the original order of assessment was made on 19.08.2024 and the order in rectification was made on 22.11.2024. Without referring Section 14 of the Limitation Act, the Hon’ble High Court held that the period of limitation for challenging the impugned order shall start ticking from the date of rejection of the rectification application, i.e., from 22.11.2024.

In the case of M. P. Steel (2015) (SC), the Hon’ble Supreme Court also observed that while calculating the period of exclusion under Section 14 of Limitation Act, the period prior to the institution of a particular proceeding and the time taken in steps taken for prosecuting such proceedings (i.e., from the date of original order/cause-of-action till the date of institution of proceedings) should also be excluded.

Time of Exclusions, as per the facts in the case of M.P. Steel (2015) (SC) – As an illustration

Thus, the emphasis is on a practical and realistic approach rather than a narrow or pedantic computation of limitation. The Hon’ble Supreme Court has observed in several cases that while considering the provisions of Section 14 of the Limitation Act, proper approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of justice rather than abort the proceedings.

7.         Whether the term “Court” includes Quasi-Judicial Authorities & Tribunals?

In M. P. Steel (2015) (SC), the Hon’ble Supreme Court also observed that the context of Section 14 of the Limitation Act would require that the term “Court” be liberally construed to include within it Quasi-Judicial Bodies and Tribunals as well. This is for the very good reason that the principle of Section 14 is that whenever a person bonafide prosecutes with due diligence another proceeding which proves to be abortive because it is without jurisdiction, or otherwise no decision could be rendered on merits, the time taken in such proceeding ought to be excluded as otherwise the person who has approached the Court in such proceeding would be penalized for no fault of his own. 

In the case of P. Sarathy vs. State Bank of India (2000) (SC), the Hon’ble Supreme Court stated that Section 14 does not speak of a “civil court” but speaks only of a “court”. It is not necessary that the court spoken of in Section 14 should be a 'civil court'.

Thus, for the purpose of calculating the time to be excluded, time spent before any court, tribunal or quasi-judicial authorities shall be taken into consideration, which is also clear from the M. P. Steel’s case, discussed in previous Para

8.         Applicability of Section 14 to the GST Appeals

This question assumes practical significance because the CGST/SGST Act is a special statute prescribing its own limitation. The answer requires a nuanced approach.

Strictly speaking, Section 14 of the Limitation Actdoes not automatically apply to every proceeding under the CGST Act. However, the equitable principles underlying Section 14, as recognised by the Hon’ble Supreme Court in M. P. Steel (2015), which was a case under the Customs Act, may still guide the Courts while considering whether the period spent in bonafide prosecution before a wrong forum deserves to be excluded in appropriate cases.

Many High Courts have allowed relief based upon Section 14: few of these are as under:-

• • Debabrata Bhowmick (Gauhati-HC):Time spent in pursuing the application of rectification under section 161 is liable to be excluded on application of the principles of Section 14 of the Limitation Act for the purposes of the appeal under section 107.
  • Vyas Traders (All-HC):  The petitioner entitled the benefit of Section 14, as he was pursuing his permit bonafidely before a wrong forum (Rectification). [Also, Anandeshwar Steels (All-HC); Prakash Medical Stores vs. U.O.I. (All-HC)]
  • Lasa Supergenrics (Bom-HC): The order dismissing the appeal on limitation was set aside for non-consideration of Section 14, and remanded the matter.
  • NTC Infrastructure (Mad-HC): The pendency of rectification application will entitle the petitioner to invoke Section 14 of the Limitation Act.

9.         Applicability of Section 14 before the Quasi-Judicial Authority & Tribunal

In the preceding discussion, we have seen that although the provisions of Section 14 of the Limitation Act do not automatically apply to proceedings under the GST law, the equitable principles embodied therein have been recognised and applied by various High Courts while considering the exclusion of time spent in bona fide proceedings before an incorrect forum.

An equally important question, however, is whether the benefit of these principles can be granted only by the constitutional courts, or whether the quasi-judicial Authorities and the Tribunal can also take them into consideration while deciding questions of limitation.

Strictly speaking, Section 14 of the Limitation Actcannot be directly invoked before the quasi-judicial bodies. In the case of Parson Tools & Plants (1975) (SC), the Hon’ble Supreme Court held that the statutory authorities exercising administrative or quasi-judicial functions are not “courts”.

However, applying the principles recognised by the Hon’ble Supreme Court in M. P. Steel (2015) (SC) and other decisions, where the facts clearly establish that the taxpayer prosecuted an earlier proceeding with due diligence, in good faith, and before a forum which lacked jurisdiction or was otherwise unable to grant the relief sought, the appellant may legitimately request the Appellate Authority or the Tribunal to re-compute the period of limitation.

Whether such a plea is accepted will ultimately depend upon the statutory framework, the jurisdiction of the authority concerned, and the facts of the individual case.

10.      Supreme Court Judgments on Section 14

(i)      M.P. Steel Corporation (2015) (SC)

This is perhaps the most important judgment on Section 14 in the context of revenue laws.

The Hon’ble Supreme Court explained that Section 14 is not merely a technical provision of limitation but a provision founded on equity, justice and good conscience. The Court emphasised the distinction between condonation and exclusion of time, observing that exclusion does not enlarge limitation; it merely excludes from computation the period during which the litigant was bonafide prosecuting the wrong remedy.

It was also stated that the principle of Section 14, which is a principle based on advancing the cause of justice, would certainly apply to exclude time taken in prosecuting proceedings which are bonafide and with due diligence pursued, which ultimately end without a decision on the merits of the case. Further, the expression “the time during which the plaintiff has been prosecuting with due diligence another civil proceeding” needs to be construed in a manner which advances the object sought to be achieved, thereby advancing the cause of justice.

(ii)    Consolidated Engineering Enterprises (2008) (SC)

Para 12………It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bonafide litigious activity…... Having regard to the intention of the legislature this Court is of the firm opinion that the equity underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy, in a wrong court, should be excluded.

(iii)   West Coast Paper Mills Ltd. (2004) (SC)

This decision adopts a liberal approach in applying Section 14. The Hon’ble Court observed that  Section 14 is wide in its application, inasmuch it is not confined in its applicability only to cases of defect of jurisdiction but it is applicable also to cases where the prior proceedings have failed on account of “other causes of like nature”. Any circumstances, legal or factual, which inhibits entertainment or consideration by the Court of the dispute on the merits comes within the scope of the section and a liberal touch must inform the interpretation of the Limitation Act which deprives the remedy of one who has right.

10.      Practical Takeaways

The following practical points may help taxpayers safeguard their valuable right of appeal under the GST law:

1. Distinguish “Exclusion of Time” from “Condonation of Delay” - The two concepts operate in different fields. Condonation pre-supposes the existence of delay and seeks the Court's or the statutory authority's indulgence to excuse it upon showing “sufficient cause”. Exclusion of time, on the other hand, proceeds on the footing that the period spent in bonafide proceedings before a wrong forum is to be ignored altogether while computing limitation. In many cases, what appears to be a delayed appeal may actually be an appeal filed within time once the excludable period is deducted.

2. Approach the First Forum at the Earliest Opportunity - If a taxpayer genuinely believes that a rectification application, writ petition or any other proceeding is the appropriate remedy, such proceedings should be initiated well within the original limitation period prescribed for filing an appeal, and not after the expiry of the limitation period.

3. Section 14 cannot revive a Dead Remedy - If the statutory limitation had already expired before approaching the wrong forum, Section 14 ordinarily has no application. It excludes time from computation; it does not resurrect a remedy that has already become time-barred. One of the common misconceptions is that filing proceedings before a wrong forum automatically extends the period of limitation: remember, it is the exclusion of the period.

4. Do Not Assume that Every Earlier Proceeding Qualifies for Exclusion - The taxpayer must establish that the earlier proceedings related to substantially the same dispute, were prosecuted before a forum that could not grant the relief due to lack of jurisdiction or another cause of a like nature, and were pursued with due diligence and good faith. Each case ultimately depends upon its own facts.

5. Act with Due Diligence and Good Faith and Preserve Evidence - The benefit of Section 14 is available only to a diligent and bona fide litigant. Any indication of deliberate delay, forum shopping or lack of bona fides may disentitle the taxpayer from claiming exclusion of time.

A claim under Section 14 is essentially a question of fact. Therefore, taxpayers should preserve all relevant records and documents, including the legal opinions, if any demonstrating that the earlier proceedings were pursued diligently and in good faith.

6. File the Correct Proceedings Promptly - Once the taxpayer becomes aware that the earlier forum lacks jurisdiction or is otherwise unable to entertain the matter, the proceedings before the competent forum should be initiated without avoidable delay. Although the period spent before the wrong forum may be excluded, any unexplained delay thereafter may adversely affect the taxpayer's case and may indicate lack of due diligence.

7   File the Appeal against the Original Order before the Correct Forum - If the taxpayer has mistakenly filed a rectification application, which is subsequently rejected, the appeal should be filed against the original adjudication order, and not against the order rejecting the rectification application. However, the taxpayer may also raise a specific ground in the appeal that the rejection of the rectification application was erroneous and legally unsustainable.

8. Examine the Entire Timeline - Before concluding that an appeal is barred by limitation, a complete chronological chart recording all the events should be prepared. A careful timeline often reveals that the apparent delay is capable of lawful exclusion.

9. Plead the Ingredients of Section 14 Specifically - Where exclusion of time is claimed, the pleadings should not refer to Section 14, merely in general terms. They should specifically state the dates of the various proceedings, the reasons for approaching the wrong forum and the facts demonstrating due diligence and good faith. Precise pleadings supported by documentary evidence considerably strengthen the claim.

10. Section 14 is a Rule of Justice, Not a Technical Defence - The underlying object of Section 14 is to ensure that an honest litigant is not denied justice merely because he pursued a remedy before an incorrect forum under a bonafide mistake. At the same time, it is not intended to protect negligent or indifferent litigants. The safest course, therefore, is always to identify the correct remedy at the earliest stage and pursue it diligently.

Conclusion

For GST practitioners and the stakeholders, the distinction between commencement of limitation, exclusion of time, and condonation of delay is indispensable. Many cases that appear to be barred by limitation may, on closer examination, involve no delay at all, once the period legitimately excludable under law is excluded from computation.

To Summarise, our Three Articles in this Series Highlight the following Principles: -

1. No communication, no delay:

2. Delay after communication:

   • If the appeal is filed within the condonable period prescribed under section 107(4) of the CGST Act, the success of the condonation application depends upon establishing “sufficient cause” through cogent facts and supporting evidence.

   • However, if the appeal is filed beyond the statutory outer limit, the Appellate Authority and Tribunal has no jurisdiction to condone the delay, and relief, if any, may be available only from the jurisdictional High Court in the exercise of its extraordinary writ jurisdiction, and only in exceptional circumstances.

3. Exclusion of Time – When Apparent Delay is No Delay:

   • Where an appeal appears to be barred by limitation, complete chronological chart of all events should be prepared to ascertain whether any period liable to be excluded under the principles embodied in Section 14 of the Limitation Act.

   • In appropriate cases, the period spent in bonafide prosecution in good faith before a wrong forum may be excluded, with the result that what appears to be a delayed appeal may, in law, still be within limitation.

Thus, a proper appreciation of these three concepts: communication of the order, condonation of delay, and exclusion of time; is essential for protecting the valuable statutory right of appeal under the GST law. In GST litigation, limitation is not merely a matter of counting days; it is a matter of correctly identifying the legal principles that govern those days.

27 July 2026

Citations:

• Commissioner of Sales Tax vs. Parson Tools & Plants - 1975 (2) TMI 86 (SC-3J)
• Consolidated Engineering Enterprises vs. The Principal Secretary, Irrigation Deptt. 2008 (4) TMI 668 - Supreme Court.
• Dy. Commissioner & Special Land Acquisition Officer vs. S. V. Global Mill Ltd. 2026 (4) TMI 505 (SC)
• M. P. Steel Corp. vs. Commissioner of Central Excise- 2015 (4) TMI 849 (SC)
• P. Sarathy vs. State Bank of India - 2000 (5) TMI 1063 (SC)
• Union of India vs. West Coast Paper Mills Ltd. - 2004 (2) TMI 680 (SC)
• Anandeshwar Steels vs. Additional Commissioner (Appeals)- 2026 (6) TMI 245 (All-HC)
• Debabrata Bhowmick vs. U.O.I.- 2026 (6) TMI 1494 (Gauhati-HC)
• Lasa Supergenrics Limited vs. State of Maharashtra - 2026 (5) TMI 1498 (Bom.-HC)
• NTC Infrastructure and Engineering (P) Ltd. vs. Addl. Commissioner- 2025 (7) TMI 1392 (Mad.-HC)
• Prakash Medical Stores vs. U.O.I. - 2026 (1) TMI 1453 (All.-HC)
• Sri Ramajeyam Engineering Industries vs. Dy. Commissioner (ST) 2025 (1) TMI 886 (Mad. HC)
• Tirumareddi Rajarao vs. Union of India - 1963 (9) TMI 56 (A.P.- HC-FB)
• Vyas Traders vs. Additional Commissioner- 2026 (2) TMI 386 (All.-HC)