Simplified Explanation of the Judgment
In a recent case decided on 14 December 2023, the Patna High Court examined whether a taxpayer could file an appeal against a tax order under the Bihar Goods and Services Tax Act, 2017 (BGST Act), even after the prescribed appeal period had expired.
The petitioner, a company director, had approached the Court to challenge an order issued by the State Tax Department under Section 73(9) of the BGST Act. This section deals with tax demands arising from cases where taxes were not paid, short paid, or erroneously refunded due to reasons other than fraud or willful misstatement.
The petitioner did not file an appeal within the statutory time limit. Under Section 107(4) of the BGST Act, a person aggrieved by an order has three months to file an appeal, and the appellate authority can condone a delay of up to one additional month — meaning, in total, four months from the date of the original order. Beyond this period, neither the appellate authority nor the High Court under Article 226 of the Constitution has the power to condone further delay.
In this case, the tax order was issued on 8 December 2021, but the petitioner only approached the High Court in 2023 — almost a year late. Normally, such a delayed challenge would not be maintainable. However, during the pendency of the case, a special notification (No. 53/2023 – Central Tax) was issued by the Central Board of Indirect Taxes and Customs (CBIC) on 2 November 2023. This notification provided temporary relief for taxpayers by allowing them to file delayed appeals under Sections 73 and 74 of the GST Acts, provided certain conditions were met.
According to the notification, any taxpayer aggrieved by an order passed on or before 31 March 2023 could file an appeal under Section 107(1) of the BGST Act on or before 31 January 2024. This was a one-time relaxation meant to clear backlogs and provide fairness to those who missed appeal deadlines during or after the pandemic years.
The High Court took note of this relaxation and held that since the petitioner’s case fell within the scope of this notification, he was entitled to avail of the special procedure. However, the Court clarified that to maintain such an appeal, the petitioner must comply with the financial conditions laid down in Paragraph 3 of the Notification — which required:
- Full payment of the admitted amount of tax, interest, fine, fee, and penalty arising from the disputed order.
- Payment of 12.5% of the remaining disputed tax amount, subject to a cap of ₹25 crores, with at least 20% of that payment made through the Electronic Cash Ledger.
The Court emphasized that these conditions were mandatory and that any appeal filed must comply strictly with them. It further stated that if the petitioner files the appeal before 31 January 2024 and fulfills all conditions, the appellate authority must hear and decide the appeal on merits.
By allowing this remedy, the Patna High Court did not quash the tax order directly but provided the petitioner with a lawful opportunity to contest it before the appropriate appellate forum. The judgment thereby balanced the principle of statutory finality with the flexibility provided by the government’s own notification.
Significance or Implication of the Judgment
This decision is significant for several reasons:
- Relief for Taxpayers: It clarifies that taxpayers who missed the regular deadline for appeal under the GST regime can still seek remedy if they comply with Notification No. 53/2023 and act before 31 January 2024.
- Encouragement for Compliance: The judgment encourages voluntary compliance by allowing defaulters a second chance while ensuring partial revenue recovery through mandatory pre-deposits.
- Judicial Consistency: The Court reaffirmed its earlier position that it cannot condone delays beyond the statutory limit unless expressly allowed by a government notification or amendment.
- Administrative Fairness: By recognizing and applying the CBIC’s special notification, the Court ensured that taxpayers receive equal benefit of central relaxations, thereby harmonizing the functioning of State GST and Central GST authorities.
For businesses in Bihar, especially those affected by procedural lapses in filing appeals, this judgment provides a timely reminder to take corrective steps under the limited window allowed by the central notification.
Legal Issue(s) Decided and the Court’s Decision
- Whether the High Court could condone delay in filing GST appeals beyond the statutory limit?
➤ No. The Court reiterated that neither the appellate authority nor the High Court can condone delay beyond the limit prescribed in Section 107(4) of the BGST Act. - Whether the petitioner could still avail the benefit of Notification No. 53/2023 – Central Tax?
➤ Yes. The Court held that the petitioner was entitled to file a delayed appeal as per the procedure laid down in the notification, provided all monetary and procedural conditions were fulfilled. - What conditions must be satisfied for the appeal to be entertained?
➤ The petitioner must:- Pay the full amount of tax, interest, and penalties admitted.
- Deposit 12.5% of the disputed tax, with at least 20% of that from the Electronic Cash Ledger.
- File the appeal on or before 31 January 2024.
Case Title
Brite Neon Signs Pvt. Ltd. (Director) v. State of Bihar & Others
Case Number
Civil Writ Jurisdiction Case No. 3133 of 2023
Coram and Names of Judges
Hon’ble the Chief Justice K. Vinod Chandran
Hon’ble Mr. Justice Rajiv Roy
Names of Advocates and Their Appearance
- For the Petitioner: Mrs. Manju Jha, Advocate
- For the Respondents: Mr. Vikash Kumar (Standing Counsel 11)
Link to Judgment
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