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Summary: Under the GST framework, the adjudicating authority can make decisions that can be appealed to the Appellate Authority. According to Section 107(11) of the CGST Act, 2017, the Appellate Authority can confirm, modify, or annul decisions but does not possess the power to remand cases back to the adjudicating authority. This was reinforced by the Allahabad High Court’s ruling, which clarified that the Appellate Authority’s functions are limited to these three actions. However, there is an exception in Section 75(2) of the CGST Act, which allows remand in cases where the initial notice regarding fraud or tax evasion lacks merit. Under this section, if a court or Appellate Authority determines that fraud charges are unsubstantiated, the proper officer must reassess the tax payable, as if the notice was issued under Section 73. Additionally, any order arising from this reassessment must be completed within two years of the directive. The doctrine of harmonious construction is also pertinent in interpreting provisions of conflicting statutes, ensuring that all relevant laws are applied consistently. In a case study, the Appellate Authority upheld the validity of a refund application without remanding the case, highlighting that the question of refund entitlement remains with the proper officer. Thus, the Appellate Authority does not hold remand authority, except as specified under Section 75(2)/(3).

Under the GST laws, the adjudicating authority is empowered to pass various decisions or orders. The person who is aggrieved by such a decision or order of the adjudicating authority can file an appeal against such order before the Appellate Authority. The Appellate Authority can pass an order by confirming, modifying or annulling the decision or order of the adjudicating authority.

Section 107(11) of the CGST Act, 2017 provides for the manner of passing order by Appellate Authority, extract of which is provided below:

‘The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order.’

From above, it can be said that under the GST laws the Appellate Authority is empowered to perform the following actions:

To confirm the order of adjudicating authority
To modify such order
To annul such order

However, the power to remand back the case to the adjudicating authority has not been given.

Judicial pronouncement;

The Allahabad High Court has held that the appellate authority exercising jurisdiction under Section 107 of the Central Goods and Service Tax Act, 2017 does not have the power to remand the case back to the adjudication authority. It only has the power to confirm or modify or annul the order under appeal.

Section 75(2) provides the exception to Appellate Authority power of remand back;

Section 75(2) of the CGST Act, 2017 provide that where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice were issued under sub-section (1) of section 73.

Section 75(3) of the CGST Act, 2017 provide that where any order is required to be issued in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction.

Clarification with regard to applicability of provisions of section 75(2) of Central Goods and Services Tax Act, 2017 and its effect on limitation (Circular No. 185/17/2022-GST)

Sub-section (3) of section 75 of CGST Act provides that an order, required to be issued in pursuance of the directions of the appellate authority or appellate tribunal or the court, has to be issued within two years from the date of communication of the said direction. Accordingly, in cases where any direction is issued by the appellate authority or appellate tribunal or the court to re-determine the amount of tax payable by the noticee by deeming the notice to have been issued under sub-section (1) of section 73 of CGST Act in accordance with the provisions of sub-section (2) of section 75 of the said Act, the proper officer is required to issue the order of redetermination of tax, interest and penalty payable within the time limit as specified in under sub-section (3) of section 75 of the said Act, i.e. within a period of two years from the date of communication of the said direction by appellate authority or appellate tribunal or the court, as the case may be.

Doctrine of Harmonious Construction

In case of inconsistencies between two or more statutes or sections of a particular statute, the doctrine of harmonious construction is followed. Interpretation should be done in such a way that one provision does not defeat the other provision unless there seems no possible construction. If the situation is so that it becomes impossible to reconcile the provisions in conflict, the courts must decide in such a way that both provisions are given effect.

Case study;

Adjudication Order: Assesse has filed a refund before the jurisdiction authority for refund of Rs. 1.20 Cr. The refund application has been verified by the proper officer and rejected, by giving an order that application has been filed after permissible time provide under GST Act, 2017.

Order of Appeal: Appellate authority has passed an order in favour of appellant and held that refund application was filed by the appellant within the prescribed time.

Question: Whether appellate authority has remanded back the case to AO for deciding the refund amount.

Ans: No, Question before the appellate authority was to decide the validity of refund application. That was decided in favour of applicant by passing an order that refund application had filed within the prescribed timeline and therefore, is valid.

Question of entitlement of refund is still pending before the proper officer and has to be decide. This had never go to the appellate authority, therefore, it cannot be said that appellate authority has remand back the case to adjudicating authority.

Conclusion:

The appellate authority has not the power to remand back the case to adjudicating authority. One exception to this rule is provided in section 75 (2)/(3) of CGST Act, 2017 where notice issued under section 74 is not sustainable, for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice were issued under sub-section (1) of section 73.

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