No. In a 16 September 2026 ruling, the Karnataka High Court held that the Revenue could not extend the time to appeal GST refund orders by relying on delayed internal communication or audit. In this departmental setting, the court treated issuance of the orders as the relevant date and held that Section 107 permits condonation only for a further month beyond the statutory appeal period.
What the Karnataka High Court decided
In The Commissioner of Central Tax v. M/s Jeans Knit Private Limited, Writ Appeal No. 966 of 2026 (T-RES), a Division Bench of Chief Justice Vibhu Bakhru and Justice K.S. Hemalekha upheld the conclusion that the Revenue’s appeals against refund orders were time-barred. The appeal challenged a Single Judge’s order of 11 November 2025.
The court rejected the idea that delayed movement of an order within the tax department could leave the start of the limitation period open-ended. It also held that the date of audit, or the date on which audit objections reached the relevant officials, did not start or reset the clock. The court stated: “Given the scheme of the CGST Act, we are unable to accept that the time period for communication of the order can be considered as indeterminate or left open-ended.”
How the Section 107 time limits work
The judgment reproduced Section 107 of the CGST Act, which provides different initial periods for an ordinary appeal and a Revenue-directed appeal, along with a limited power to condone delay:
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| Situation | Period stated in Section 107 | What it means |
|---|---|---|
| Appeal by an aggrieved person under Section 107(1) | Three months from communication of the decision or order | The ordinary appeal period described in the judgment. |
| Application directed by the Commissioner under Section 107(2) | Six months | The period for a subordinate officer to apply to the appellate authority on the Commissioner’s direction. |
| Condonation under Section 107(4) | Up to a further one month | The appellate authority may allow a late appeal if sufficient cause is shown, but cannot extend the period beyond this additional month. |
The time limit at issue in Jeans Knit was the Revenue-directed route under Section 107(2), not an ordinary taxpayer appeal. The court held that the additional month under Section 107(4) is the outer limit of the appellate authority’s condonation power.
Why internal handling did not change the start date
The judgment treated “communication” in the context of action by the Revenue against its own refund orders as the date the orders were issued. In reaching that conclusion, it relied on the Delhi High Court’s interpretation of Section 107 in Grapes Digital Pvt. Ltd. v. Principal Commissioner. It also referred to Section 169(1)(d), which recognizes making a decision or order available on the common portal as a method of service.
This is a ruling about internal departmental delay; it should not be read as deciding that issuance is always the communication date in every dispute about service on a taxpayer. The relevant facts and service method matter in a distinct recipient-facing communication dispute.
The court also recounted CBIC instructions described in the judgment: post-audit was to be completed within three months after Form GST RFD-06 was issued, with findings sent to the review branch in that period, and review completed at least 30 days before expiry of the appeal period. The judgment’s account of these instructions underscores that internal review was expected to fit within the statutory timetable, rather than postpone it.
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What happened in the Jeans Knit dispute
Jeans Knit was described in the judgment as a 100% Export Oriented Unit manufacturing and exporting garments. It sought refunds of accumulated, unutilized input tax credit for July through December 2017. Six refund orders issued between 12 January and 28 March 2018 sanctioned a total of ₹33,88,40,732.
In February 2019, the Commissioner reviewed the refunds, concluded that input tax credit on capital goods had been wrongly included, and authorized appeals to the Commissioner (Appeals). That authority rejected the limitation objection, accepted the Revenue’s position on the refund merits, and directed recovery of ₹29,61,78,425 plus interest. The High Court appeal addressed limitation and upheld the finding that the Revenue’s appeals were late. It did not decide the underlying substantive eligibility of capital-goods credit for refund.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why recovery under Sections 73 or 74 did not extend the appeal deadline
The Revenue argued that recovery could also be pursued under Sections 73 or 74 of the CGST Act. The court rejected that as a reason to treat a late Section 107 appeal as timely: recovery proceedings and an appeal against the refund orders are distinct routes, and the availability of one does not enlarge the limitation period for the other.
Quick Recap
What the ruling means for taxpayers and the Revenue
- For the Revenue: internal audit, review, or delayed transmission cannot be relied on to postpone the Section 107 clock in the departmental setting considered by the court.
- For taxpayers: the decision supports a time-bound approach to Revenue appeals against refund orders, but does not settle every possible dispute about when an order was communicated to its recipient.
- For refund disputes: this was a limitation ruling, not a general decision on whether input tax credit on capital goods qualifies for refund.
- For alternative recovery routes: Sections 73 and 74 remain distinct from a Section 107 appeal; their mention did not cure the appeal’s lateness.
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