Appellate Remedies under GST Law (Part-II)
(Revenue’s Appeal & Revision under GST)
Not only an aggrieved person, but also the Revenue Department may not be in agreement with a decision or an order. In such circumstances, the law provides two mechanisms to the Department: An Application to the Appellate Authority against an adjudication order; the Revision of the decision or order.
First Mechanism – Application/Appeal to the Appellate Authority
As per Section 107 (2) of the CGST Act, 2017, the Commissioner may, on his own motion ,or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under 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.
This sub-section envisages that the Commissioner may call for and examine “the record of any proceedings” in which an adjudicating authority has passed any order or decision and, if not satisfied that the order is not legal or proper, he may by an “order” direct “any” officer subordinate to him apply to appellate authority to determine such points arising out of the said decision/ order as specified in the order giving directions. Section 160 uses the expression “review”. So we can say order u/ss. 107 (2) is a Review Order.
As per ss. 107 (3), the appellant authority shall deal with the application as if it is an appeal made against the order/decision and as if the authorized officer is an appellant. Needless, to point out that only the authorized officer can file the application/appeal.
The author is of the opinion that that the time period of six months is to be read with the verb “apply” and, as such, the time period of six months from the date of communication of order is for making an application to the appellate authority, and the order for giving directions has to be prior to that. As per rule 109 (1) of the CGST Rules, the application is to be filed form APL-03 with relevant documents either electronically or as may be notified by the Commissioner.
Second Mechanism – Revision of the Order
The second mechanism with the Revenue is revision of the decision or order. This mechanism is a new feature in the central tax regime as the Central Excise and Service Tax laws had no parallel provisions. Section 108 of the CGST Act, provides the mechanism of revision by the Revisional Authority.
Revisional Authority
As per Section 2 (99) of the CGST Act, 2017, “Revisional Authority” means an authority appointed or authorized for the purpose of revision of decision or orders as referred in section 108.
CBIC, vide Notification No. 5/2020-C.T., dated 13-1-2020, has authorized the Principal Commissioner or Commissioner of Central Tax as Revisional Authority for decisions or orders passed by the Additional or Joint Commissioner of Central Tax, and the Additional or Joint Commissioner of Central Tax as Revisional Authority for decisions or orders passed by the Deputy Commissioner or Assistant Commissioner or Superintendent of Central Tax.
Empowerment and Mechanism
The Sub-Section 108 (1) of the CGST Act is a one long dense sentence (having 203 words!); it empowers the Revisional Authority to “stay the operation of a decision or order” and “pass such order” as he thinks just and proper, and it also provides the mechanism of doing so.
For ease of reference, the string of phrases in section 108 (1) is parsed syntactically as below:
- Subject to the provisions of section 121 and any rules made thereunder[1],
- the Revisional Authority may, on his own motion, or
- upon information received by him or on request from the Commissioner of State tax, or the Commissioner of Union territory tax,
- call for and examine the record[2] of any proceedings, and
- if he considers that any decision[3] or order passed under this Act or under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by any officer subordinate to him is
- erroneous in so far as it is prejudicial to the interest of revenue and is illegal or improper
- or has not taken into account certain material facts, whether available at the time of issuance of the said order or not
- or in consequence of an observation by the Comptroller and Auditor General of India,
- he may, if necessary, stay the operation of such decision or order for such period as he deems fit and
- after giving the person concerned an opportunity of being heard and
- after making such further inquiry as may be necessary,
- pass such order, as he thinks just and proper, including enhancing or modifying or annulling the said decision or order.
Thus, this ss. is the empowering sub-section for the purpose of revision. This ss. empowers the “Revisional Authority” who can be a Principal Commissioner/Commissioner or an Additional/ Joint Commissioner, as against ss. 107 (2) which only empowers a Commissioner. This ss. talks of “any proceedings” in relation to “any decision or order”, as against “adjudication order” under ss. 107 (2), but other sub-sections of section 108 convey the sense of adjudication order and not any order.
Another very significant distinction vis-a vis ss. 107 (2) is that the Revisional Authority can itself “stay” the operation of a decision and order in specified circumstances. The mechanism herein further provides that the “Revisional Authority” can pass an order as he thinks just and proper, including enhancing or modifying or annulling the said decision or order. He has to give to the person concerned an opportunity of being heard. Section 108 (4) also visualizes a notice for the purpose. As per Rule 109B of CGST Rules, if the order in revision is likely to adversely affect a person, the Revisional Authority shall serve on such person a notice in Form GST RVN-01 and shall give him a reasonable opportunity of being heard.
Time Limit and Other Restrictions
As per ss. 108 (2), the Revisional Authority shall not exercise any power under sub-section (1), if the order has been subject to an appeal under section 107 (appeal to Appellate Authority) or section 112 (Appeal to Appellate Tribunal) or section 117 (Appeal to High Court) or section 118 (Appeal to Supreme Court). Thus, res sub-judice principle will apply, and a case in appeal cannot be subjected to revision by the Revisional Authority.
The Revisional Authority can exercise its power within a statutory time-frame. As per clause (b) of ss. 108 (2), the Revisional Authority cannot exercise its powers before the period specified under sub-section (2) of section 107 [ Six Months from Communication of the decision/order] has not yet expired or after the three years of the passing of the decision or order sought to be revised. Needless to say that stay, if any, will also end after three years.
If the order has already been taken for revision under section 108 at an earlier stage, or if the order has been passed in exercise of the powers under sub-section (1), the order cannot be subjected to revision. Thus, the principle of res judicata will also be applicable.
However, as per the proviso to ss. 108 (2), the Revisional Authority may pass an order under sub-section (1) on any point which has not been raised and decided in an appeal referred to in clause (a) of sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or before the expiry of a period of three years referred to in clause (b) of that sub-section, whichever is later.
Order is Appealable, Else Binding
As per ss. 108 (3), every order passed in revision under sub-section (1) shall, subject to the provisions of section 113 or section 117 or section 118, be final and binding on the parties. Thus the order of the Revisional Authority is an appealable order, and if not appealed against, it will be binding. As per rule 109B (2), the Revisionary Authority shall, along with it’s order under section 108 (1), issue a summary of the order in FORM GST APL-04 clearly indicating the final amount of demand confirmed
Lengthened Limitation
As per ss. 108 (4), if the said decision or order involves an issue on which the Appellate Tribunal or the High Court has given its decision in some other proceedings and an appeal to the High Court or the Supreme Court against such decision of the Appellate Tribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Tribunal and the date of the decision of the High Court or the date of the decision of the High Court and the date of the decision of the Supreme Court shall be excluded in computing the period of limitation referred to in clause (b) of sub-section (2), where proceedings for revision have been initiated by way of issue of a notice under this section.
As per the author’s understanding, this means if the Department is in appeal on an issue in the High Court or Supreme Court, the pendency period of such appeal (starting from the dated of order appealed against is passed) will be excluded from the period prescribed under clause (b) of sub-section 108 (2) on an identical issue, provided a notice was issued within the statutorily prescribed limit in the said clause.
Further, as per ss. 108(5), where the issuance of an order under sub-section (1) is stayed by the order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of limitation referred to in clause (b) of sub-section (2).
To sum up, from the taxpayer’s perspective, the issue does not culminate after a favourable initial adjudication/ appellate order; the sword of further litigation keeps on hanging till the revision period, which is quite long, is over.
Disclaimer: The analysis is solely the author’s interpretation of the provisions, and is purely for information purposes and is not opinion of any sort, legal or otherwise. GST, in many respects, is a new and evolving law, and jurisprudence on these aspects is yet to emerge and crystallize. For any query, the author can be reached at viney.go@gmail.com.
[1] Section 121 refers to non-appealable orders. Thus, non-appealable orders can also not be revised by the Revisional Authority.
[2] See Definition of “record’ under ss. 108 (6) (i) ibid.
[3] Decision shall include “intimation”, ss. 108 (6) (ii).
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