Rectification under the UPGST Act and limitation: time spent pursuing rectification excludes limitation, appeal to be decided on merits after deposits.

High Court applied the principle that limitation is abeyant during bona fide pursuit of rectification under the UPGST Act, treating time spent on a Section 161 rectification application as excluded from limitation; consequently an appeal filed after rectification rejection was held maintainable despite delay, relying on a Division Bench precedent. The Court found a separate appeal timely where the petitioner withdrew a writ with liberty to appeal and held the petitioner entitled to the benefit of limitation abeyance for pursuing remedy before a wrong forum. Because interim deposits (10% and 25% respectively) were made, the appellate authority must decide the appeals on merits within two months.

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Issues: (i) Whether the period during which an application for rectification under Section 161 of the UPGST Act, 2017 remained pending is to be excluded for computing limitation for filing an appeal by applying Section 14 of the Limitation Act, 1963; (ii) Whether appeals rejected by the appellate authority as barred by limitation and delay are maintainable where the petitioner had pursued remedies (including a writ dismissed as withdrawn with liberty) bona fide and made requisite pre-deposit.

Issue (i): Whether pendency of a rectification application under Section 161 suspends or excludes the running of limitation for filing an appeal by operation of Section 14 Limitation Act, 1963.

Analysis: Where an application for rectification under Section 161 is filed within the prescribed time, the running of limitation for filing an appeal is held to be in abeyance from the date of filing of that application until its decision. The underlying principle of Section 14 applies where the rectification application is filed bona fide and within time; the only exception is where the rectification application itself is time-barred. The Division Bench precedent establishes that the period while the rectification application remained pending must be excluded from the limitation for filing an appeal.

Conclusion: The period during which a timely rectification application under Section 161 remained pending is excluded for computing limitation for filing an appeal; this conclusion is in favour of the assessee.

Issue (ii): Whether appeals dismissed or rejected as barred by limitation should be held maintainable where the petitioner had pursued alternate remedies bona fide (including withdrawal of a writ with liberty to file appeal) and had made the prescribed pre-deposit.

Analysis: Where a petitioner has pursued remedies bona fide before a forum and has acted within available avenues (including filing a writ that is dismissed as withdrawn with liberty and subsequently preferring an appeal), the period spent pursuing those remedies is to be excluded in computing limitation. Deposit of the prescribed percentage as interim measure removes an impediment to adjudication on merits. In such circumstances the appellate authority must treat the appeal as maintainable and decide it on merits rather than refuse admission solely on limitation grounds.

Conclusion: The appeals were maintainable and the impugned orders rejecting the appeals as barred by limitation are set aside; this conclusion is in favour of the assessee.

Final Conclusion: The impugned orders rejecting the appeals as barred by limitation are set aside and the appellate authority is directed to proceed to decide the appeals on merits within two months while treating them as maintainable.

Ratio Decidendi: Where a rectification application under Section 161 is filed within time and pursued bona fide, the period of its pendency is excluded from limitation for filing an appeal under the principle of Section 14 of the Limitation Act, 1963, and an appellate authority must treat subsequent appeals as maintainable if the exclusion brings the appeal within time and pre-deposit requirements are met.

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