GST: Delhi High Court Says Appeal Must Be Heard on Merits, Not Thrown Out for Delay

A company recently filed a writ petition in the Delhi High Court challenging the rejection of their GST appeal by the tax department. The appeal was rejected as it was time-barred, meaning filed after the due date allowed under Section 107 of the CGST Act, 2017. The company cited a notification (No. 56/2023-Central Tax), dated December 28, 2023, which extended the limitation period to file an appeal and said this extension should apply in this case too and claimed that the initial order was served late, which caused a delay in filing an appeal. In the final order court ruled in favour of the company and quashed the rejection order of the tax department.

The present writ petition (W.P.(C) 12366/2025) is being filed by a company named M/s Classic Construction Co. (petitioner) under Articles 226 and 227 of the Constitution of India, against the Union of India and Others (respondents) in the Delhi High Court before the benches comprising of Justice Prathiba M. Singh and Justice Shail Jain. The petitioner challenged an Order-in-Appeal dated 13th May, 2025, passed by the Office of the Commissioner of Central Tax Appeals-I, Delhi, and a Government notification (No. 56/2023-Central Tax dated 28th December 2023), which they claim is against the provisions of the CGST Act, 2017 (also called “ultra vires”). The hearing was conducted in hybrid mode (a mix of virtual and physical appearance).

Background Of Case

M/s Classic Construction Co. (petitioner) is a sole proprietorship firm engaged in the trading business of ceramic products. The company is registered under the Central Goods and Services Tax (CGST) Act, 2017, and has a valid GSTIN. The petitioner was sent a notice on 18th January 2023 by the GST department, indicating discrepancies in their GST returns. Meanwhile, the government issued Notification No. 56/2023 dated 28th December 2023, which extended the time limit for filing GST returns and, indirectly, for issuing Show Cause Notices (SCNs) under Section 73 of the CGST Act. Just thereafter, one day, the tax department issued an SCN dated 29th December 2023 to the company, accusing them of wrongly claiming ITC (Input Tax Credit).

On 19th February 2024, the company replied to the notice. Then the GST department, on 30th April 2024, issued an Order-in-Original to the company, confirming the demand in the SCN notice of Rs. 4,410,806. The company claimed that the order was uploaded and served only on 31st May, 2024. The company filed an appeal against the order on 8th November 2024; however, it was rejected on 13th May 2025 by the appellant authority. The reason for rejection was that the appeal was filed beyond the allowed time limit.

Why Appeal Was Rejected Initially

According to Section 107(1) of the CGST Act, an individual is allowed to file an appeal within 3 months from the date of receiving an order. Under Section 107(4), an additional 1-month delay can be allowed, but only if the appellant requests condonation of the delay and provides sufficient reasons.

In the present case, the last date to file the appeal was 29th July 2024. However, it was filed on 8th November 2024, which is over 3 months late. Additionally, the petitioner did not file a request to condone the delay. Therefore, if there was a one-month delay, it could be accepted; in this case, the appeal was filed too late. Because of this, the department dismissed the appeal as time-barred without checking the actual merits of the case.

What High Court Decided:

The Delhi High Court referred to an earlier case (W.P.(C) 1613/2025—M/s Mohan International v. Union of India) where the same Notification No. 56/2023 had been challenged. In that case, the Court had ruled that even if an appeal seems to be filed late, it should still be heard on its merits. This is because the legality of the notification that extended limitation periods is itself under review by the Supreme Court. Therefore, until the Supreme Court makes a final decision, such appeals should not be dismissed just on the basis of delay.

In the final order, the high court quashed the Order-in-Appeal dated 13th May 2025. Directed the Appellate Authority to now hear and decide the case based on merits, and cannot dismiss it just because it was late. A hearing notice must be sent to the petitioner at their given email address ([email protected]). After the hearing, the authority must pass a proper, reasoned order.