GST department cannot extend appeal deadlines by delaying internal communication of refund orders, Karnataka High Court rules

The respondent, a registered garment manufacturer and exporter, obtained refunds of accumulated input tax credit for July–December 2017. The refund-sanction orders were issued between 12 January and 28 March 2018.

The Commissioner reviewed those orders and directed appeals under Section 107(2) of the CGST Act; the Revenue’s appeals were accompanied by applications for condonation of delay. The Commissioner (Appeals) rejected the limitation objection, set aside the refund orders and directed recovery of part of the refund.

The respondent challenged the appellate order in W.P. No. 8128/2020. The Single Judge held that the Revenue’s appeals were time-barred, and the Revenue appealed that decision. The present appeal concerned only the limitation issue.

1. Whether the Revenue’s appeals against the refund-sanction orders were filed within the limitation period prescribed by Section 107(2) of the CGST Act, having regard to the dates of issuance and the Revenue’s asserted later dates of intra-departmental communication.

2. Whether the delay could be justified or condoned by relying on post-audit review, the recovery provisions of Section 73, or the power to condone delay under Section 107(4).

Section 107(2) of the CGST Act requires the Commissioner to direct an authorised officer to apply to the Appellate Authority within six months from communication of the adjudicating authority’s decision or order; Section 107(4) permits condonation only for a further period of one month.

For intra-departmental communication, where the statute does not require the adjudicating authority to communicate its order to the reviewing authority, “communication” is construed as the date of issuance of the order; internal departmental delay does not extend limitation (*Grapes Digital Pvt. Ltd. v. Principal Commissioner and Another*, as quoted at para. 13).

CBIC Instruction No. 03/2022-GST provides for immediate online transmission of refund orders to the review module, completion of post-audit within three months, and completion of review at least 30 days before the appeal period expires.

Section 169(1)(d) recognises making a communication available on the common portal as a mode of service.

The possibility of separate recovery proceedings under Section 73 does not alter the limitation period for an appeal under Section 107.

The refund orders were issued between January and March 2018, while the review orders were made in February 2019; the review directions therefore could not result in appeals being filed within six months of issuance.

The Revenue’s reliance on later communication dates was not sufficient to extend limitation: the statutory scheme and *Grapes Digital* do not permit an open-ended period based on intra-departmental transmission, and the applicable CBIC instruction required online transmission and timely review.

Nor did post-audit observations change the date from which limitation ran.

The Commissioner (Appeals) also could not use Section 73 recovery proceedings to validate time-barred appeals, or condone delay beyond the additional one-month period allowed by Section 107(4).

Finding no infirmity in the Single Judge’s decision, the Court dismissed the writ appeal.