The Allahabad High Court recently ruled in the case of M/S Vyas Traders Vs Additional Commissioner, Grade-2 And Another, addressing the issue of limitation in GST appeals. The case involved a notice issued to M/S Vyas Traders for allegedly claiming excess Input Tax Credit (ITC) in their GSTR-3B compared to GSTR-2A, leading to a tax, interest, and penalty order under Section 73 of the UPGST Act. Initially, the petitioner sought rectification under Section 161, but the application was rejected. Subsequent appeals were dismissed as time-barred without considering the time spent in rectification proceedings.

The petitioner also faced issues in another connected case where goods in transit were seized and penalized. After withdrawing a writ from the High Court with the liberty to appeal, the appeal was again dismissed on the grounds of limitation. The central issue was whether the time spent pursuing rectification or remedies before an incorrect forum should be excluded when calculating the limitation period for GST appeals.

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The Court concluded that once a rectification application is filed within the limitation period, the appeal's limitation period is paused until the application is resolved. The Court relied on earlier Division Bench rulings and the principle underlying Section 14 of the Limitation Act, affirming that time spent bona fide before a wrong forum should not negate a statutory right of appeal. Consequently, the orders dismissing the appeals as time-barred were set aside, and the appeals were directed to be decided on their merits.