The Gujarat High Court, in Kanan International Pvt. Ltd. & Anr. v. Union of India & Ors., has set aside orders of the GST Appellate Authority which had rejected the petitioners’ appeals as time-barred by calculating limitation from the original adjudication order, notwithstanding that the petitioners had filed rectification applications under Section 161 of the GST Act within the prescribed statutory period.
The Division Bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati held that where a rectification application is filed within the prescribed period and is thereafter duly considered and decided by a reasoned order, the Appellate Authority is required to consider the limitation period with reference to the order deciding the rectification application.
Case Details
Case: Kanan International Pvt. Ltd. & Anr. v. Union of India & Ors.
Court: High Court of Gujarat at Ahmedabad
Bench: Justice A.S. Supehia and Justice Vaibhavi D. Nanavati
Lead Case: R/Special Civil Application No. 1116 of 2025
Connected Matters: R/Special Civil Application Nos. 1117, 1119, 1128, 1129, 1147, 1148 and 1169 of 2025
Date of Judgment: 13 August 2026
Relevant Provisions: Sections 107 and 161 of the GST Act
Outcome: Petitions allowed; impugned appellate orders quashed and matters remanded for fresh consideration on merits.
Background of the Dispute
The dispute arose from the rejection of the petitioners’ GST refund claim.
Initially, the Adjudicating Authority rejected the refund application on 16 December 2019 through Form GST RFD-06. The petitioners challenged that order before the Appellate Authority. By an order dated 8 October 2020, the Appellate Authority allowed the appeal after observing that the refund rejection order had been passed without granting the petitioners an opportunity of hearing. The matter was therefore remitted to the Adjudicating Authority for fresh adjudication.
Pursuant to the remand, a fresh notice was issued on 12 September 2022. The petitioners filed a detailed reply. Thereafter, by order dated 3 October 2022, the Adjudicating Authority again rejected the refund claim.
Rectification Application Under Section 161
According to the petitioners, all the contentions raised by them had not been fully considered in the order dated 3 October 2022. They therefore filed a rectification application under Section 161 of the Central/Gujarat Goods and Services Tax Act, 2017 on 2 January 2023.
The High Court specifically recorded that the rectification application was filed within the prescribed statutory period of 90 days.
The Adjudicating Authority subsequently rejected the rectification application by a detailed and reasoned order dated 14 September 2023.
Appeal Rejected as Time-Barred
Following rejection of the rectification application, the petitioners filed an appeal before the Appellate Authority on 11 January 2024, challenging both:
- the original refund rejection order dated 3 October 2022; and
- the rectification rejection order dated 14 September 2023.
However, by order dated 31 May 2024, the Appellate Authority rejected the appeal solely on the ground of limitation.
The Appellate Authority calculated limitation from the original adjudication order dated 3 October 2022 and observed that it did not possess the power to condone delay beyond the period prescribed under Section 107(4) of the GST Act.
The petitioners therefore approached the Gujarat High Court.
Issue Before the Gujarat High Court
The principal issue was whether, where a rectification application under Section 161 had been filed within the prescribed statutory period and subsequently decided by the Adjudicating Authority, an appeal could be rejected as time-barred by computing limitation solely from the date of the original adjudication order.
The petitioners contended that limitation was required to be considered from 14 September 2023, being the date on which their rectification application was rejected.
The respondents, on the other hand, maintained that limitation had to be calculated from the original order dated 3 October 2022.
High Court Relies on Earlier Judgment on Analogous Issue
The Gujarat High Court referred to its earlier judgment dated 29 January 2026 in Special Civil Application No. 9540 of 2025, involving an analogous issue.
In that case, the Court had observed that where a rectification application was filed within the prescribed period and subsequently decided, its filing and disposal constituted a vital circumstance directly affecting computation of limitation under Section 107.
The Court had further recognised that although an appellate authority cannot condone delay beyond the statutory period prescribed under Section 107, the correct starting point for computing limitation must first be determined by taking into consideration the timely rectification proceedings.
Findings of the High Court
The High Court noted that the petitioners’ rectification application was filed on 2 January 2023, within the statutory period of 90 days from the original order dated 3 October 2022.
That application was not merely pending or ignored. It was considered by the Adjudicating Authority and rejected through a detailed and reasoned order dated 14 September 2023.
In these circumstances, the Court held that the Appellate Authority was required to examine the petitioners’ appeal by considering limitation from the date on which the rectification application was decided.
The Appellate Authority therefore could not reject the appeal merely by calculating limitation from the original adjudication order dated 3 October 2022.
Important Clarification by the Court
The High Court did not hold that every appeal filed after a rectification proceeding would automatically be within limitation.
It expressly clarified that if, even after computing limitation from the rectification order dated 14 September 2023, the appeal was found to be barred by limitation, the Appellate Authority would remain entitled to reject the appeal on that ground.
The defect in the impugned orders was that limitation had been computed from the original adjudication order despite the timely filing and subsequent adjudication of the Section 161 rectification application.
Thus, the ruling concerns the proper starting point for consideration of limitation in the factual circumstances where a statutory rectification application was filed within time and was thereafter decided by a reasoned order.
Operative Directions
The Gujarat High Court allowed the group of petitions and quashed and set aside the impugned orders passed by the Appellate Authority.
The matters were remanded to Respondent No. 3, the Appellate Authority, with directions to:
- decide the petitioners’ appeals afresh on merits and in accordance with law;
- provide the petitioners an opportunity of hearing; and
- complete the exercise within 12 weeks from the date of receipt of the judgment.
The Rule was made absolute.
Key Legal Principle
The judgment establishes that where a taxpayer files a rectification application under Section 161 of the GST Act within the prescribed statutory period, and the competent authority considers and disposes of that application through a reasoned order, the Appellate Authority must take the rectification order into account while determining limitation for an appeal under Section 107.
An appeal cannot, in such circumstances, be rejected merely by mechanically calculating limitation from the original adjudication order without considering the timely rectification proceedings and the date on which those proceedings concluded.
Key Takeaway
The decision highlights the distinction between condonation of delay beyond the permissible statutory period and correct computation of the limitation period itself.
While the statutory restriction on condoning an appeal beyond the permissible period remains, the Appellate Authority must first correctly determine the relevant date from which limitation is to be examined where a timely Section 161 rectification application has intervened and has been formally adjudicated.
