When Limitation Ends the Appeal but Not the Remedy

Bombay High Court Opens a Constitutional Route Back into the GST System

The expiry of the statutory period for filing an appeal usually poses a serious obstacle for a taxpayer. Under Section 107(4) of the CGST Act, 2017, the appellate authority can condone delay only within a further period of one month. Once that period expires, the authority cannot entertain the appeal, irrespective of the explanation offered by the taxpayer.

But should a delayed appeal result in the permanent cancellation of GST registration? Should a taxpayer who is willing to file pending returns, pay outstanding dues, and resume regular compliance remain permanently outside the GST system merely because the appellate remedy has become time-barred?

The Division Bench of the Bombay High Court addressed this tension in Shri Datt Stone Crusher, through its Proprietor Achyut J. Murkute v. Commissioner of State GST and Others, 2026-VIL-953-BOM, Neutral Citation No. 2026:bhc-AUG:37826-DB. The decision was delivered on 19 August 2026.

The ruling draws a clear distinction between the appellate authority's restricted power under Section 107 and the High Court's constitutional jurisdiction under Article 226. While the appellate authority could not condone the delay, the High Court could still examine whether continued cancellation was justified when it prevented lawful business, obstructed GST compliance, and affected future revenue collection.

A Cancelled Registration, a Delayed Appeal and a Closed Statutory Door

The State Tax Officer cancelled the petitioner's GST registration with effect from 29 February 2024. The petitioner then filed an appeal under Section 107 of the Maharashtra Goods and Services Tax Act, 2017.

The Deputy Commissioner of Sales Tax dismissed the appeal on 17 November 2025 as it was filed beyond the permissible limitation period. Section 107 ordinarily requires an appeal to be filed within three months from the date of communication of the relevant order. Under Section 107(4), the appellate authority may condone a further delay of only one month if sufficient cause is established.

The statute does not empower the appellate authority to condone delay beyond this additional period. Accordingly, the rejection of the appeal was consistent with the limited jurisdiction conferred upon that authority.

With the statutory remedy no longer available, the petitioner approached the Bombay High Court under Article 226 of the Constitution. The petitioner sought the quashing of the cancellation order and the appellate order, the restoration of registration from 29 February 2024, and permission to file the pending GST returns.

The reported copy contains a minor discrepancy regarding the date of the cancellation order. The relief clause refers to an order dated 24 November 2024, whereas the operative portion refers to an order dated 28 November 2024. However, this discrepancy does not affect the legal principle or the relief granted.

The Real Dispute Was Not About Condoning Delay

At first glance, the matter appeared to concern limitation. In substance, however, the larger question was whether the expiry of the appeal period should permanently exclude the petitioner from the GST framework.

The petitioner did not ask the High Court to confer an additional condonation power on the appellate authority. Instead, the petitioner invoked the High Court's independent constitutional jurisdiction to challenge the continuing consequences of cancellation.

This distinction proved central to the outcome. The statutory restriction under Section 107 determined what the appellate authority could do. It did not, by itself, determine the scope of the High Court's powers under Article 226 of the Constitution of India.

The controversy therefore shifted from a narrow question of delayed filing to a broader examination of proportionality, constitutional protection, future compliance, and revenue interest.

Revenue Defended the Statutory Time Limit

The State opposed the writ petition on the ground that the appeal had been filed beyond the prescribed period. The Commissioner had no authority to condone delay after the additional 30-day period permitted by Section 107(4) had expired. Accordingly, no fault could be found with the appellate order dismissing the appeal as time-barred.

This contention correctly stated the legal limitation governing the appellate authority. A statutory authority cannot assume an equitable or inherent power to condone delay when the legislation restricts condonation to a specified period.

The Department's argument, however, addressed the maintainability of the statutory appeal. It did not fully address whether continued cancellation should remain undisturbed despite its ongoing consequences for the taxpayer and the State.

The absence of power in the appellate authority was therefore not treated as equivalent to the absence of constitutional power in the High Court.

The Taxpayer Sought Re-entry, Not Immunity from Compliance

The petitioner's case focused on restoring registration so the business could be carried on within the GST system. Restoration would enable the petitioner to file pending returns, regularise earlier defaults, discharge outstanding liabilities, and resume future compliance.

The relief sought was not an exemption from GST obligations. It was an opportunity to fulfil them.

The petitioner relied principally on Rohit Enterprises v. Commissioner of State GST, 2023 (2) TMI 759 (Bombay High Court) - 2023-VIL-117-BOM. Reliance was also placed on M/s Sambhaji Multi Services v. Commissioner of State GST, 2024 (7) TMI 804 (Bombay High Court) - 2024-VIL-734-BOM; Shri Ganesh Majoor Sahkari Sanstha Limited v. Union of India, 2024 (12) TMI 57 (Bombay High Court); Neo Built v. ETO-cum-Proper Officer, 2022 (6) TMI 463 (Punjab and Haryana High Court); and ENS Enterprises v. Superintendent, GST, 2024 (1) TMI 1363 (Madras High Court).

These authorities reflected a broader judicial concern: cancellation should not become an irreversible commercial disability when the taxpayer is prepared to return to the statutory framework and comply with the conditions imposed by law.

Limitation Cannot Become a Mechanism for Permanent Business Closure

The reasoning in Rohit Enterprises v. Commissioner of State GST, 2023 (2) TMI 759 (Bombay High Court) - 2023-VIL-117-BOM; formed the principal basis of the decision. In that case, an appeal against the cancellation of registration was also rejected as having been filed beyond the period prescribed under Sections 107(1) and 107(4). The Bombay High Court accepted that the appellate authority had no power to condone the delay beyond the additional statutory period. The inquiry, however, did not end there.

The GST law could not be interpreted in a manner that prevented a person from carrying on lawful trade or business. The protection available under Articles 19(1)(g) and 21 of the Constitution remained relevant despite limitations in the statutory framework.

Cancellation of GST registration has consequences extending far beyond the disposal of an appeal. It prevents the taxpayer from issuing regular tax invoices, filing returns, reporting outward supplies, and conducting business through the mechanism contemplated by the GST law.

The principle emerging from Rohit Enterprises is not that limitation can be ignored. It is that limitation should not automatically operate as a permanent prohibition against lawful business when the resulting exclusion serves neither compliance nor revenue.

Keeping a Taxpayer Outside GST Can Also Harm Revenue

The judgment recognises an important practical feature of registration disputes. Continued cancellation may adversely affect the State as much as the taxpayer. A person kept outside the GST registration framework cannot easily file pending returns, rectify earlier defaults, or pay future taxes through the ordinary compliance mechanism. Permanent exclusion may therefore prevent the very conduct that the GST system seeks to promote.

Restoration, when linked with fulfilment of all statutory requirements, brings the taxpayer back into the tax net. It permits filing of returns, payment of pending dues, continuation of legitimate business, and collection of prospective revenue.

This makes registration-cancellation disputes different from many conventional limitation cases. The expiry of time does not necessarily create a financial or legal right in favour of the State. Continued cancellation may instead produce an ongoing loss of revenue.

The objective of limitation is to bring legal disputes to an end. In a registration matter, it should not necessarily be applied so as to permanently prevent a person from conducting lawful business within the tax framework.

Statutory Finality Cannot Curtail Constitutional Judicial Review

The reasoning in Rohit Enterprises drew support from the Supreme Court's decision in Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536, reported as 1996-VIL-01-SC-CE.

The relevant principle from Mafatlal Industries is that the jurisdiction of the High Courts under Article 226 and of the Supreme Court under Article 32 cannot be barred or curtailed by an ordinary enactment.

A detailed statutory remedy does not extinguish the constitutional power of judicial review. At the same time, constitutional jurisdiction must be exercised with due regard to the legislative scheme. It cannot be used routinely to disregard statutory restrictions or to create powers that the legislation has consciously withheld.

This balance is crucial to understanding the present decision. The High Court did not extend the appellate authority's power to condone delay. It did not direct the appellate authority to treat the delayed appeal as having been filed within time. Instead, it independently examined the continuing consequences of cancellation under Article 226.

Relief was therefore grounded in constitutional jurisdiction, not in an artificial expansion of Section 107(4).

Restoration May Be Permitted to Facilitate Compliance and Protect Revenue

The petitioner also relied on later decisions of the Bombay High Court that adopted a similar approach.

In Shri Ganesh Majoor Sahkari Sanstha Limited v. Union of India, 2024 (12) TMI 57 (Bombay High Court), a coordinate Bench followed the reasoning in Rohit Enterprises, demonstrating that the principle was not confined to the facts of a single isolated case.

M/s Sambhaji Multi Services v. Commissioner of State GST, 2024 (7) TMI 804 (Bombay High Court) - 2024-VIL-734-BOM was also part of the line of authorities relied upon in support of restoration. These cases reflect judicial recognition that a taxpayer willing to regularise compliance should not necessarily remain permanently excluded merely because the statutory appeal has become time-barred.

The principle, however, is fact-sensitive. Restoration is not automatic, and the relief granted in each case may differ. The nature of the cancellation, the taxpayer's conduct, the period of default, the reasons for delay, and willingness to discharge pending obligations remain relevant.

Constitutional Relief May Prevent Disproportionate Consequences of Registration Cancellation

Reliance on Neo Built v. ETO-cum-Proper Officer, 2022 (6) TMI 463 (Punjab and Haryana High Court); and ENS Enterprises v. Superintendent, GST, 2024 (1) TMI 1363 (Madras High Court) shows that similar concerns have arisen before other High Courts.

These decisions reflect a broader judicial approach to cancellation disputes. Where restoration can bring the taxpayer back into the tax system, enable compliance, and protect revenue, constitutional courts may consider relief despite the failure of the ordinary appellate remedy.

The exact relief in each case depends on its facts. These authorities do not establish that every delayed appeal must result in restoration. They support the more limited proposition that the expiry of the statutory appeal period does not extinguish the High Court's jurisdiction to examine whether continued cancellation is disproportionate or counterproductive.

Restoration Came with a Full Compliance Price Tag

The High Court quashed the cancellation order passed by the State Tax Officer and the appellate order dated 17 November 2025. The petitioner's registration bearing GSTIN 27ARDPM3738K2ZG was declared valid from 29 February 2024. The relief was expressly conditional.

The petitioner was required to file all up-to-date GST returns and deposit all pending dues, together with applicable interest, penalty, and late fee, under Rule 23(1) of the MGST Rules, 2017.

These conditions are central to the decision. Restoration did not erase past defaults, waive outstanding tax, or grant immunity from statutory consequences. It provided a mechanism for the petitioner to return to the GST system while protecting the State's right to recover all amounts payable under law.

The order thus balanced the right to resume lawful business with the obligation to complete pending compliance.

Restoration Promotes GST Compliance More Effectively Than Permanent Exclusion

The decision preserves the limitation under Section 107 while recognising the High Court's constitutional power to prevent permanent exclusion from the GST system. Conditional restoration enables the taxpayer to resume lawful business, regularise pending compliance, and protect State revenue.

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