2026 (1) TMI 1453 - HC - GST

Limitation and rectification under the UP GST Act: pending bona fide rectification suspends appeal limitation, preserving timeliness of appeal.

The note explains that where a special statute provides power to condone delay, that scheme displaces the general limitation principle, and an application ... Principle underlying Section 14 of the Limitation Act - exclusion of time during bona fide proceedings prosecuted with due diligence - rectification of errors apparent on the face of record - appeals to Appellate Authority u/s 107 of the UP GST Act, 2017 - power to condone delay u/s 107(4) - rectification remedy u/s 161 - HELD THAT:- Once the power to condone delay has been specifically provided under Section 107(4) of the Act, that is a special Act, it amounts to necessary and automatic exclusion of the general principle contained in Section 5 of the Limitation Act. To the extent the statute creates a forum but permits exercise of its jurisdiction only in certain circumstances and not in others, it cannot be said that the application filed by the petitioner was so misconceived to begin with that it may be readily inferred therefrom-either it was not in 'good faith' or that it was not 'bona fide'. Therefore, that conclusion, if reached, would be harsh and may result in unnecessarily restricting natural full applicability of the underlying principle contained in Section 14 of the Limitation Act. That would itself obstruct the cause of justice. The statutory remedy to seek rectification of our order being in addition to the statutory remedy to file an appeal, at first, limitation to seek either or both those remedies, starts running, simultaneously. If no application is filed under Section 161 of the Act to seek rectification (of a mistake in such order), upto three months, the limitation to seek rectification would expire at the end of three months. In that case, simultaneously, the normal period of limitation to file first appeal against such order would also have run continuously and concurrently and, therefore, it would also be exhausted, simultaneously. If, however, before expiry of three months, an application is filed under Section 161 of the Act, to seek rectification in that order, the running of limitation (to file appeal against such order), would be put in abeyance from the date of filing of such application, upto the date when that application is decided. To the extent that application is filed 'bona fide' in 'good faith' and is pursued, that principle would apply, without doubt. The only exception to that principle may be-where the application seeking rectification of a mistake is itself filed beyond the period of limitation prescribed under Section 161 of the Act. There no such benefit may arise. Here, that application was filed within the time prescribed under the said provisions. Consequentially, and without exception, the duration of that application (filed by the petitioner seeking rectification of mistake in the adjudication order dated 23.4.2024), having remained pending, has to be excluded from the limitation to file appeal, as running of limitation remained in abeyance, during pendency of application filed under Section 161 of the Act. Here, that period must be excluded. Thus, the appeal was filed within two months and nine days from the date of the ex-parte adjudication order. The period of limitation being three months, the appeal filed was well within limitation. Writ petition is allowed. Issues: Whether the underlying principle of Section 14 of the Limitation Act, 1963 applies to exclude the period during which a rectification application filed under Section 161 of the UP GST Act, 2017 remained pending, thereby rendering an appeal under Section 107 of the UP GST Act, 2017 within time.Analysis: The statutory scheme of the UP GST Act prescribes a three month period for filing first appeals under Section 107(1) and a limited one month power of condonation under Section 107(4). Section 161 permits rectification of errors apparent on the face of record within specified time-limits. Section 14 of the Limitation Act operates to exclude from computation of limitation the time during which a party in good faith and with due diligence prosecutes another proceeding which is prosecuted in a forum unable to entertain it; it is a principle advancing the cause of justice. Where a rectification application under Section 161 is filed within the period prescribed and prosecuted bona fide, the running of limitation for filing an appeal is put in abeyance for the pendency of that application and that period must be excluded under the Section 14 principle. The exclusion does not apply where the rectification application itself is filed beyond the statutory period for rectification. Applying these legal principles to the facts, the rectification application was filed within time and remained pending; therefore the pendency period is excluded from computation of limitation for the appeal.Conclusion: The principle of Section 14 of the Limitation Act applies to exclude the duration of the bona fide, in-time rectification application under Section 161 from the limitation period for filing the appeal under Section 107; accordingly the appeal was within limitation and the decision is in favour of the assessee.