Appeal Rejected for Lack of Condonation Application Set Aside; Assessee Allowed to Rectify Technical Defect.

Appeal Rejected for Lack of Condonation Application Set Aside; Assessee Allowed to Rectify Technical Defect.

Issue: Whether an appeal filed beyond the initial 90-day limitation period but within the further 30-day condonable period under Section 107 of the CGST/Tamil Nadu GST Act, 2017, can be outright rejected by the Appellate Authority merely because the assessee erroneously failed to file a separate condonation of delay application along with the appeal.

Facts: For the period 2019-20, a show cause notice (SCN) was issued to the assessee, and subsequently, a demand was confirmed without, as per the assessee, properly considering their reply. Aggrieved, the assessee preferred an appeal under Section 107 of the GST Act. This appeal was filed beyond the initial limitation period of 90 days but within the condonable period of a further 30 days. However, the assessee erroneously failed to file a separate condonation of delay application along with the appeal. Consequently, the respondent (Appellate Authority) rejected the assessee’s appeal. The assessee contended that the appeal was filed well within the overall limitation period allowed under Section 107.

Decision:In favor of the assessee: The court noted that the assessee had indeed filed the appeal beyond 90 days but within the condonable period of 30 days under Section 107. It appeared that the assessee erroneously filed the appeal without enclosing a condonation of delay application. The court cited its own precedent in Indian Potash Ltd. v. Deputy Commissioner (ST) GST appeal [2024] GST 220 (Madras), where it was held that an appeal could not be rejected on the ground of technical defects. The court emphasized that while there was a procedural irregularity in filing the appeal, such procedural irregularity should not defeat the assessee’s substantive right. Therefore, the assessee should be given an opportunity to rectify the defect. Accordingly, the writ petition was disposed of by implicitly directing the Appellate Authority to allow the assessee to file the condonation application and then hear the appeal on its merits.

Key Takeaways:

• Condonation of Delay (Section 107(4)): Section 107(4) allows an appeal to be presented within three months from the date on which the decision or order sought to be appealed against is communicated. The Appellate Authority may, if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the said period of three months, allow it to be presented within a further period of one month.
• Substance Over Technicalities: This judgment strongly advocates for the principle of “substance over technicalities” in tax matters. A genuine procedural oversight (like not attaching a formal condonation application when the delay is within the condonable period) should not lead to the outright rejection of a substantive appeal.
• Right to Appeal: The right to appeal is a statutory right, and courts are generally hesitant to allow its frustration on mere technical defects, especially when the assessee demonstrates willingness to comply and the delay is within the condonable limit.
• Opportunity to Rectify Defects: Tax authorities should provide a reasonable opportunity to the assessee to rectify minor procedural defects in an appeal, rather than rejecting it outright.
• Binding Precedent: The court’s reliance on its own previous decision in Indian Potash Ltd. highlights the importance of consistency in judicial pronouncements, particularly on procedural aspects.
• Practical Implications: This ruling is a significant relief for assessees who might inadvertently miss the initial appeal deadline but are within the condonable period, ensuring that their appeals are heard on merits after rectifying the procedural lapse.