GST Appeal Under Section 107: Appealable and Non-Appealable Orders

Summary: Section 107 of the Central Goods and Services Tax Act, 2017 provides a statutory remedy to persons aggrieved by decisions or orders passed by an adjudicating authority. The provision permits an appeal before the prescribed Appellate Authority within three months from communication of the decision or order, subject to the applicable procedural requirements and pre-deposit. However, not every communication, notice or administrative action of a GST officer qualifies as an appealable decision. The article examines the meaning of an adjudicating authority, the distinction between an order and a mere communication, the statutory exceptions under Section 121 and the availability of constitutional remedies where an appeal is not maintainable. The article also examines non-appealable decisions and orders under Section 121. These include orders transferring proceedings between officers, orders concerning seizure or retention of books of account and documents, orders sanctioning prosecution and orders passed under Section 80 relating to payment in instalments. Section 120 separately empowers the Board to prescribe monetary limits regulating departmental appeals and does not itself extinguish an otherwise available statutory remedy. The Calcutta High Court decision in Gati-Kintetsu Express Private Limited is discussed to distinguish seizure of goods or conveyances from seizure of books and documents. The article further considers the Bombay High Court decision in Dee Vee Projects Ltd., concerning the availability of appellate remedies against restrictions imposed on the electronic credit ledger under Rule 86A. Several judicial decisions illustrate the limits of statutory appeals and the availability of alternative remedies. In Savita Oil Technologies Ltd. v. Union of India, the Bombay High Court recognised the right to appeal against adverse intimations issued in Form GST DRC-05 and held that limitations of the electronic filing portal could not defeat a statutory appellate remedy. In Bharat Parihar and connected matters, the Bombay High Court considered the maintainability of writ petitions against orders disposing of objections to provisional attachment. The Supreme Court decision in Radha Krishan Industries v. State of Himachal Pradesh is particularly significant because it explains that an order of provisional attachment passed through delegated powers of the Commissioner may not be appealable under Section 107, leaving the affected person to invoke writ jurisdiction.

Introduction

1.  Section 107(1) of the CGST Act provides an appellate remedy to a person aggrieved by a decision or order passed by an adjudicating authority under the Act. This remedy enables the aggrieved person to challenge the decision or order before the prescribed Appellate Authority.

2.The exercise of this statutory remedy is subject to the applicable conditions and requirements concerning limitation, the prescribed form and manner of filing, and payment of the amount of pre-deposit required for admission of the appeal.

3. This article examines the limited question of which decisions or orders are appealable under section 107 of the CGST Act. Its discussion is confined to appeals before the Appellate Authority.

Appeal mechanism under the CGST Act

4. Section 107 of the Act provides for an appeal to the Appellate Authority by a person aggrieved by a decision or order passed by an adjudicating authority. Section 112 provides for an appeal to the Appellate Tribunal against orders passed by the Appellate Authority under section 107 or the Revisional Authority under section 108, subject to the applicable statutory requirements.

5.  Under section 117 of the Act  a person aggrieved by an order passed by the State Benches of the Appellate Tribunal may appeal to the High Court. The High Court may admit the appeal if it is satisfied that the case involves a substantial question of law.

6. Section 118(1)(a) of the Act provides for an appeal to the Supreme Court from an order passed by the Principal Bench of the Appellate Tribunal. Section 118(1)(b) also provides for an appeal from a judgment or order passed by the High Court in an appeal under section 117, where the High Court  certifies the case to be fit for appeal to the Supreme Court.

Provision of first appeal before Appellate Authority

7.Section 107- Appeal to Appellate Authority.

8. (1) Any person aggrieved by any decision or order passed under this Act or the Stat e Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such appellate authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.

9. Section 107(1) Act provides an appellate remedy to a person aggrieved by a decision or order passed by an adjudicating authority under Act   and he may file appeal against such decision or order to the prescribed Appellate Authority within three months from the date of communication.

10. Accordingly, all decisions or orders  passed by adjudicating authority are appealable subject to section 120 and 121 of the Act.

Adjudicating authority

11. It is pertinent to note that only decisions or orders passed by the adjudicating authority are appealable under section 107 of the Act and first appeal may be filed against such orders.

12. As per section 2(4) of the Act ‘adjudicating authority’  means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the section  Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the National Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of  171 of the Act.

13. Revisional Authority and other specified authorities are   excluded from the said definition and hence first appeal cannot be filed against  such orders before Appellate Authority. However, appeal may be filed against  Revision order before the Appellate Tribunal u/s 112 of the Act.

Meaning and scope of ‘decision’ or ‘order’

14.  Forms are prescribed for the various orders under CGST Rules. Term ‘Order’ is not defined in the Act or Rule. However, section 108, which empower Commissioner to review decision or order’s of sub-ordinate officer, define term ‘decision’. Accordingly, “decision” shall include intimation given by any officer lower in rank than Revisional Authority.

15. Any intimation or letter issued by the adjudicating authority may constitute a decision or order where it; finally determines tax, interest, penalty, fine or fee; denies input-tax credit; accepts or rejects refund; grants, rejects or cancels registration; confiscates goods or conveyance; rejects a statutory application; or other which adversely affect to the appellant.

16. In order to qualify any letter or intimation as decision or order as contemplated in section 107(1) there should be findings or observations recorded by the adjudicating authority along with provisions of law. It is apparent that order or decision is pronounced after an evaluation of facts and law with proper reasoning and discussion and findings.

17.  The question as to whether particular letter or communication amounts to order or decision so as to make the appeal maintainable would depend on facts of each case. If on consideration of the facts and circumstances, it is found that the order communicated by the impugned letter is such as to affect the rights of the party, the such order/ decision  should be appealable and appeal is maintainable

18. A show-cause notice, audit objection, summons, investigation letter, advisory or pre-notice intimation etc are not appealable, because it ordinarily does not possess the necessary finality because further adjudication remains pending.

19. Normally, any decision passed by an adjudicating authority is appealable u/s 107 of the Act where conclusively determined the tax liability, interest, penalty or other liabilities or rights of the affected person.

20. In the case of Anjani Technoplast Ltd (2015) 326 ELT 472 Delhi High Court has held that no vested right of appeal is created in law by mere issuance of show cause notice and right to appeal accrues only after passing of adjudication orderand hence no appeal could be filed against show cause notice.

21. In the case of (2008-TIOL-879-CESTAT-DEL )BHAGWATI GASES LTD(Cestat Delhi) Tribunal has held that letter issued by authority is an order and it is appealable and observed that

22. 5. It is true that there was no adjudication order as such, but it cannot be said that the impugned communication was a letter simplicitor. Under Section 35 of Central Excise Act, appeal lies not only against a decision but also an order and we are inclined to think that where the order impugned determines the rights of the party or is likely to affect its rights, communication thereof cannot be said to be a communication simplicitor. It is common Knowledge, more often than not, that orders are passed in the file and they are communicated by letters. The point for consideration is whether the impugned communication creates any limitation on the right of the appellant in the matter of removal of capital goods without payment of cenvat credit or not.

23. 8. It would thus appeal that the question as to whether particular letter or communication amounts to order or decision so as to make the appeal maintainable would depend on facts of each case. If on consideration of the facts and circumstances, it is found that the order communicated by the impugned letter is such as to affect the rights of the party, the appeal should be maintainable. We put a pointed question to the learned departmental representative that if the appeal is held to be not maintainable, what would be the remedy of the appellant. The law does not countenance a situation where the person is rendered remediless. In the circumstances of the case, the only option available to the appellant was to approach the Commissioner and the Commissioner was obliged to decide the matter on merit. The order of the Commissioner holding the appeal to be not maintainable cannot, therefore, be sustained. Accordingly, we set-aside the order of the Commissioner and remit the matter back to him to pass a fresh order on merit in accordance with law as early as possible preferably within two months of receipt of a copy of this order.

24. In CCE, Noida Vs. Electron Energy Equipments Pvt. Ltd., 2007 (81) RLT 369, appeal against the letter of the Superintendent of Central Excise to the effect that suo-moto modvat credit transferred by the appellants was inadmissible, was held to be maintainable.

25. In the case of TNT India Pvt Ltd (2007) 8STJ 346 (Cestat Bangalore) Tribunal has held that letter of Commissioner informing appellant their liability to tax, being an order that alters rights and liabilities of the assessee  is appealable

26.  It can be said that any order passed by adjudicating authority is appealable u/s 107 of the Act except non-appealable orders specified in section 121 of the Act.

Appeal not to be filed in certain cases

27. Section 120 (1) -The Board may, on the recommendations of the Council, from time to time, issue orders or instructions or directions fixing such monetary limits, as it may deem fit, for the purposes of regulating the filing of appeal or application by the officer of the central tax under the provisions of this Chapter.

28. Section 120 empowers the Board, on the recommendations of the GST Council, to prescribe monetary limits for departmental appeals. An order falling below the prescribed monetary limit remains legally appealable. The Department merely refrains from filing an appeal pursuant to its litigation policy.

Non-appealable decisions and orders

29.Section 121-Notwithstanding anything to the contrary in any provisions of this Act, no appeal shall lie against any decision taken or order passed by an officer of central tax if such decision taken or order passed relates to any one or more of the following matters, namely:- (a) an order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer; or  (b) an order pertaining to the seizure or retention of books of account, register and other documents; or (c) an order sanctioning prosecution under this Act; or  (d) an order passed under section 80.*

30. Section 121 is an exception to Section 107 of the Act. While Section 107 of the Act  makes every decision or order passed under the Act of 2017 to be appealable, Section 121 makes an exception thereto and states that, few which are recognized in Sub-section (a) to (d) would not be appealable.

Order of transfer of proceeding

31. As per Section 121(a) order of the Commissioner transferring proceedings from one officer to another is non-appealable.

Order of seizure or retention of books of accounts

32. As per section 121(b) Order of seizure or retention of books of account, registers is non-appealable.

33. In the case of Gati-Kintetsu Express Private Limited vs. Assistant Commissioner of State Tax, Kharagpur Range & Ors. (W.P. 6633 (W) of 2018), the Calcutta High Court ruled that an order for the seizure of goods or vehicles under Section 129(1) is appealable under Section 107 of the CGST Act, holding that the bar on appeals under Section 121(b)applies strictly to the seizure of books of account, registers, and documents and not to goods or conveyance.

Order of sanctioning of prosecution

34.  As per Section 121(c) an order sanctioning prosecution under the Act is not appealable.

Instalment order u/s 80

35. Section 80 permits the Commissioner to the taxable person  to extend payment time or allow payment through not more than twenty-four monthly instalments, subject to interest and prescribed conditions. Return-based self-assessed liability is excluded. As per Section 121(d) of the Act rejection of instalment application or unjust instalment order is not appealable.

(2022-TIOL-238-HC-MUM-GST) DEE VEE PROJECTS LTD

36. In this case Bombay High Court has held that Appellate remedy or revisional remedy is not available against order passed under rule 86A of CGST Rules blocking use of electronic credit ledger.

37.20. Reading the provision, we can see that appeal under section 107(1) can be filed against a decision or order passed under Central GST Act or State GST Act or the Union Territory GST Act by an adjudicating authority. It is also clear that this provision does not include any decision or order passed under the Rules framed under Central GST Act or any other Rules. In this case, the respondents maintain that the impugned order and action has been passed and taken under rule 86-A of the Rules, 2017. Therefore, we find that no appeal remedy could have been available to the petitioner under this provision.

38. In the case of  Bharat Parihar v. State of Maharashtra through PP Office and Others, with Kishan Lal Bunkar v. State of Maharashtra through PP Office and Others and Sunbright Designers Pvt. Ltd. v. State of Maharashtra and Others, Bombay High Court, decided on 30 June 2023, 2023:BHC-AS:17642-DB, (Writ Petition Nos. 3742, 3744 and 3905 of 2023) Bombay High Court has held that an order disposing of objections to provisional attachment under rule 159(5) was not appealable under section 107 and observed as under;

39. 3. At the outset, the Respondents have raised a preliminary ground that the order disposing off objections under Rule 159(5) of CGST Rules attaching the bank account provisionally is an appealable order and, therefore, this Court should not entertain the petition. The Respondents have relied on Section 107 of the Act in support of the contention that the same is an appealable order. On the other hand, the Petitioner relied upon the decision of the Supreme Court in the case of Radha Krishan Industries vs. State of Himachal Pradesh 1, wherein an identical submission was made before the Supreme Court and the Supreme Court in paragraphs 63 to 66 have held that order disposing the objections to provisional attachment of bank account is  not an appealable order and the only remedy that is available is in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution of India. The Respondents cannot take a position contrary to the decision of the Supreme Court. Thus, the objection as to alternative remedy being no more res integra and concluded by the decision of the Supreme Court in the case of Radha Krishan Industries (supra), the present writ petition needs to be entertained. *

Appealable decisions or orders

40.  Section 107(1) state that decisions or orders passed by the adjudicating authority are appealable under section 107 of the Act.  Hence, all decisions or orders passed by the adjudicating authority are appealable under section 107 of the Act subject to section 120 and 121 of the Act.

41. In the case of Anjani Technoplast Ltd (2015) 326 ELT 472 Delhi High Court has held that no vested right of appeal is created in law by mere issuance of show cause notice and right to appeal accrues only after passing of adjudication order.

42. In the case of Savita Oil Technologies Ltd. v. Union of India and Others, decided on 18 July 2023, 2023(BHC-OS:6924-DB, Writ Petition No. 204 of 2023) the Bombay High Court has held that intimations in FORM GST DRC-05 (tax deposited under protest) issued by Proper officer is an appealable order under section 107 of the Act and observed as under;.

43. *8. *Considering the rival contentions and having perused the provisions under Section 107 of the CGST Act, we are of the opinion that there is substance in the submissions as urged on behalf of the petitioners. The petitioners certainly have a legitimate right to file an appeal being aggrieved by intimations dated 17th/18th May 2022 issued in Form DRC- 05 as noted above. Merely because electronic portal does not make a provision for filing of an appeal against an intimation issued in Form DRC-05, the petitioners cannot be faulted and for such technical reason, it cannot be countenanced that a statutory right of appeal available to the petitioners is rendered otiose.

44. In the case of Radha Krishnan Industries. (2021-TIOL-179-SC-GST) Supreme Court has held that no appeal against provisional attachment order passed under section 83 could be filed under section 107 of the Act and observed as under ;

45. 61 Sub-Section (1) of Section 107 makes it abundantly clear that an appeal to the Appellate Authority is available against a decision or order passed under the HPGST Act or CGST Act by an “adjudicating authority”. Sub-Section (2) similarly provides that *

46. 2) The Commissioner may, on his own motion, or upon request from the Commissioner of central tax, call for and examine the record of any proceeding in which an adjudicating authority has passed any decision or order under this Act or the Central Goods and Services Tax Act, 2017 (No. 12 of 2017) for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.

47. Sub-Section (2) confers a revisional power on the Commissioner in regard to the legality or propriety of a decision or order passed by an adjudicating authority. The expression ‘adjudicating authority’ is defined by Section 2(4) in the following terms:

48. “(4) “adjudicating authority” means any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Commissioner, Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal;”

49.62 From the above definition, it is evident that the expression ‘adjudicating authority’ does not include among other authorities, the Commissioner. In the present case, the narration of facts indicates that on 21 October 2020, the Commissioner had in exercise of his powers under Section 5(3) made a delegation inter alia to the Joint Commissioner of State Taxes and Excise in respect of the powers vested under Section 83(1). The Joint Commissioner, in other words, was exercising the powers which are vested in the Commissioner under Section 83(1) to order a provisional attachment in pursuance of the delegation exercised on 21 October 2020. This being the position, clearly the order passed by the Joint Commissioner as a delegate of the Commissioner was not subject to an appeal under Section 107(1) and the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution. The High Court was, therefore, clearly in error in declining to entertain the writ proceedings.*

Consequences  of amendment in appeal provisions.

50. It is well settled that right to prefer appeal is a substantive vested  right. It is equally settled that when a statute provides for a right to prefer appeal, it can also limit or restrict such right by imposing appropriate conditions. Generally, rights of appeal are governed by law prevailing on the date of institution of proceeding and not law prevailing on the date of decision or filing of appeal. However,  right of appeal after it’s vesting could be taken away by the legislature through amendment of law by using express words to that effect or by necessary intendment.

51. Hon’ble Supreme Court Judgement in case of Hoosein Kasam Dada (India) Ltd. Vs. State of Madhya Pradesh and Others on 23.02.1953 (4STC114) = 2002-TIOL-363-SC-CT The brief case law is as under :

52. “The right of appeal was treated as a substantive vested right that accrued when assessment proceedings commenced before the First Instance Authority. A later amendment requiring proof of payment of assessed taxes as a condition for the admission of the appeal could not curtail the right, unless the retrospective application was clearly expressed or necessarily implied. Because of the amended proviso created the substantial additional burden, it was held inapplicable to pending proceedings, and the appeal had to be admitted without insisting for proof of payment of assessed taxes”.

53. In the case of T. A. Pai Management Institute (2013) 29 STR 577 (Cestat. Bengalore) Tribunal  held that right of appeal is governed by law prevailing on the date of institution of revision proceeding and not by law prevailing on  date of decision of revisional authority or on the date of filing of appeal against such decision. It was further held that right of appeal after it’s vesting could be taken away by the legislature through amendment of law by using express words to that effect or by necessary intendment.

54. In the case of Sea Breeze Courier (2017) 51 STR 364 Kerla High Court has held that all rights of appeal are governed by law prevailing on the date of institution of proceeding and not law prevailing on the date of decision or filing of appeal.

Writ under article 226 in appealable  and non-appealable orders.

55. Article 226 of the Constitution of India empowers High Courts to issue writs against GST authorities, though courts normally restrict this power when an alternate statutory appeal exists under the Central Goods and Services Tax (CGST) Act, 2017.

56. Ordinarily, where a statute creates a complete machinery for redressal of grievances by providing an appellate remedy, the High Court, in exercise of its discretionary jurisdiction under Article 226 of the Constitution, would refrain from entertaining a challenge to the original adjudication order. This self-imposed restraint is founded upon the principle that where the legislature has provided a specialised mechanism for adjudication of disputes together with a hierarchy of appellate remedies, the parties must ordinarily pursue the remedy so provided before invoking the extraordinary writ jurisdiction of the High Court

57. At the same time, it is equally well settled that the rule requiring exhaustion of an alternative statutory remedy is one of discretion and not of jurisdiction. The existence of an alternative remedy does not operate as an absolute bar to the exercise of powers under Article 226 of the Constitution.

58. In the case of Radha Krishnan Industries (2021-TIOL-179-SC-GST )Supreme Court has held that

59. (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well;*

60. (ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person;

61. (iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged;

62. (iv) An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law;

63. (v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and

64. (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.

Conclusion

65. Section 107(1) Act provides an appellate remedy to a person aggrieved by a decision or order passed by an adjudicating authority under Act

66. All decisions or orders passed by adjudicating authority are appealable subject to section 120 and 121 of the Act.

67. The expression “any decision or order” in Section 107 is broad, but it does not include every communication or action of a GST officer.

68. If on consideration of the facts and circumstances, it is found that the decision or order communicated by the impugned letter is such as to affect the rights of the party, the such order/ decision  should be appealable and appeal is maintainable.

69. An appeal ordinarily lies where a competent adjudicating authority, acting under the GST law, makes a final determination adversely affecting the legal rights or liabilities of a person

70. Section 121 is an exception to Section 107 of the Act. While Section 107 of the Act makes every decision or order passed under the Act  to be appealable, Section 121 makes an exception thereto and states that, order of the Commissioner transferring proceedings from one officer to another ; Order of seizure or retention of books of account, registers ; order sanctioning prosecution; order passed u/s 80 of the Act, are non-appealable.

71. Article 226 of the Constitution of India empowers High Courts to issue writs against orders passed by GST authorities, though courts normally restrict this power when an alternate statutory appeal exists under the Central Goods and Services Tax (CGST) Act, 2017.

72. Cases Discussed

• Savita Oil Technologies Ltd. v. Union of India & Others – Bombay High Court, 18 July 2023, 2023, Writ Petition No. 204 of 2023. Appealability of Form GST DRC-05 intimations.
• Bharat Parihar v. State of Maharashtra & Others; Kishan Lal Bunkar v. State of Maharashtra & Others; Sunbright Designers Pvt. Ltd. v. State of Maharashtra & Others – Bombay High Court, 30 June 2023, 2023, Writ Petition Nos. 3742, 3744 and 3905 of 2023. Orders disposing of objections to provisional attachment.
• Dee Vee Projects Ltd. – Bombay High Court, 2022-TIOL-238-HC-MUM-GST. Appellate remedy against restrictions under Rule 86A.
• Radha Krishan Industries v. State of Himachal Pradesh – Supreme Court, 2021-TIOL-179-SC-GST. Provisional attachment, statutory appeals and writ jurisdiction.
• Gati-Kintetsu Express Private Limited v. Assistant Commissioner of State Tax, Kharagpur Range & Others – Calcutta High Court, W.P. 6633(W) of 2018. Distinction between seizure of goods and seizure of books or documents under Section 121.
• Sea Breeze Courier – Kerala High Court, (2017) 51 STR 364. Vested appellate rights and applicable law.
• Anjani Technoplast Ltd. – Delhi High Court, (2015) 326 ELT 472. Right of appeal against adjudication orders rather than mere show-cause notices.
• T. A. Pai Management Institute – CESTAT Bangalore, (2013) 29 STR 577. Effect of legislative amendments on vested appellate rights.
• Bhagwati Gases Ltd. – CESTAT Delhi, 2008-TIOL-879-CESTAT-DEL. Appealability of communications affecting substantive rights.
• CCE, Noida v. Electron Energy Equipments Pvt. Ltd. – 2007 (81) RLT 369. Appeal against a departmental letter affecting Modvat credit.
• TNT India Pvt. Ltd. – CESTAT Bangalore, (2007) 8 STJ 346. Departmental communication determining tax liability as an appealable order.
• Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh – Supreme Court, (1953) 4 STC 114. Vested right of appeal and subsequent pre-deposit conditions.

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Author: Motiram Kanadje | Retired Joint Commissioner of State Tax | Pune

Author can be reached via email E-mail [email protected]

Disclaimer: Nothing contained in this document is to be construed as legal opinion or view of author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. The author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this article .