Case Law Details
Shyam Traders & Ors. Vs State of West Bengal & Ors. (Calcutta High Court)
Calcutta High Court holds GST Appellate Authority cannot remand matter under Section 107(11)
The Calcutta High Court has held that the Appellate Authority under Section 107 of the CGST/WBGST Acts cannot remand a matter to the Adjudicating Authority, since Section 107(11) expressly prohibits sending the case back to the authority whose order is under challenge.
In M/s. Shyam Traders & Ors. v. The State of West Bengal & Ors. (WPA 2357 of 2025), the petitioners questioned the appellate order dated 20 May 2024 to the extent it directed them to appear before the Adjudicating Authority with supporting documents for allowing admissible input tax credit and settling the dispute. According to the petitioners, that direction was, in substance, a remand, though the statute does not permit such a course.
The dispute arose from an ex parte Order-in-Original dated 11 September 2023 passed under Section 73(9), by which tax, interest and penalty aggregating to Rs. 18,19,565.91 were confirmed for FY 2017-18. The demand was mainly on account of alleged short payment of tax on outward supplies and alleged excess availment of input tax credit.
The petitioners had also moved an application under Section 161 for rectification of the appellate order, contending that the remand direction was an error apparent on the face of the record. That application came to be rejected on 16 September 2025 only on the ground of limitation, as it had been filed beyond the prescribed period.
The Revenue argued that once the rectification application had been rejected, the proper course for the petitioners was to pursue the statutory remedy, and that no interference was called for in writ jurisdiction. The Court, however, found that the real issue was one of jurisdiction, namely, whether the Appellate Authority could at all remand the matter under Section 107.
On a plain reading of Section 107(11), the Court noted that the Appellate Authority may confirm, modify or annul the order appealed against, but it cannot refer the case back to the original authority. The judgment makes it clear that while further inquiry may be undertaken if necessary, the final adjudicatory exercise must still be completed by the Appellate Authority itself.
The Court observed that, having accepted the petitioners’ case on merits to the extent of recording that the excess input tax credit had already been reversed, the Appellate Authority ought to have modified the demand appropriately. It could not send the parties back to the Adjudicating Authority for that purpose.
The plea of merger raised on behalf of the Revenue was also rejected. The Court held that a jurisdictional defect of this nature does not get cured merely because the rectification application was rejected on limitation, and such an order cannot be insulated from judicial review on that basis.
Accordingly, the High Court set aside the operative portion of the Order-in-Appeal dated 20 May 2024 insofar as it directed remand to the Adjudicating Authority. The order dated 16 September 2025 rejecting the rectification application was also set aside.
The matter has been sent back to the Appellate Authority for fresh consideration on the basis of the findings already recorded in the earlier appellate order. The Appellate Authority has been directed to pass a reasoned order strictly in terms of Section 107(11), without remanding the matter, and preferably within eight weeks from communication of the High Court’s order.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The instant writ petition has been filed challenging the Order-in-Appeal dated May 20, 2024, passed by the Additional Commissioner, State Tax (respondent no. 3), acting as the Appellate Authority under Section 107 of the West Bengal Goods and Services Tax Act, 2017 / the Central Goods and Services Tax Act, 2017 (hereinafter collectively referred to as “the said Act”), to the limited extent that it remands the matter to the Adjudicating Authority. The petitioners also challenge the subsequent order dated September 16, 2025, whereby their application for rectification of the said Order-in-Appeal was rejected on the ground that it had been filed beyond the prescribed period of limitation.
The Adjudicating Authority (respondent no. 2) had passed an ex parte Order-in-Original dated September 11, 2023, under Section 73(9) of the said Act, confirming a demand of tax, interest, and penalty aggregating to Rs. 18,19,565.91 for the financial year 2017–2018. The demand principally arose under two heads, namely, tax alleged to have been short-paid on outward supplies and Input Tax Credit alleged to have been availed in excess of the permissible limit.
Aggrieved thereby, the petitioners preferred a statutory appeal under Section 107 of the said Act. By the impugned Order-in-Appeal dated May 20, 2024, the Appellate Authority, upon considering the merits of the case, directed the petitioners to appear before the Adjudicating Authority and produce the requisite documentary evidence for the purpose of allowing the admissible Input Tax Credit and settling the matter. The petitioners contend that this direction, in substance and effect, amounts to a remand of the proceedings to the Adjudicating Authority, which is beyond the scope of the powers conferred upon the Appellate Authority under Section 107 of the said Act.
The petitioners thereafter filed an application under Section 161 of the said Act seeking rectification of the Order-in-Appeal on the ground that the direction remanding the matter constituted an error apparent on the face of the record. By order dated September 16, 2025, the said application was rejected solely on the ground that it had been filed beyond the period of six months prescribed under the first proviso to Section 161 of the said Act, without any adjudication on the jurisdictional issue raised by the petitioners.
Mr. Jagriti Mishra, learned Additional Advocate General appearing on behalf of the respondent-Revenue, submits that since the petitioners themselves invoked the jurisdiction of the Appellate Authority by filing an application for rectification, and the said application has been rejected on the ground of limitation, the order rejecting the rectification application stands merged with the original Order-in-Appeal. It is, therefore, contended that no interference with the Order-in-Appeal is warranted in the exercise of the writ jurisdiction of this Court, and that it is open to the petitioners to avail themselves of the statutory appellate remedy against the orders impugned herein.
Having heard the learned advocates appearing for the respective parties and upon consideration of the materials on record, the short question that falls for determination is whether the Appellate Authority, while exercising its powers under Section 107 of the said Act, is empowered to remand the matter to the Adjudicating Authority whose order was the subject matter of the appeal.
Section 107(11) of the said Act reads as follows:
“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 authority that passed the said decision or order:
Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order:
Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under Section 73 or Section 74.”
A plain reading of the aforesaid provision makes it abundantly clear that the Appellate Authority is empowered to pass such order as it deems just and proper by confirming, modifying, or annulling the decision or order appealed against. The provision, however, unequivocally prohibits the Appellate Authority from referring the case back to the authority that passed the decision or order under appeal. Thus, the statute contemplates only three courses of action available to the Appellate Authority, namely, to confirm, modify, or annul the impugned decision or order. Where necessary, the Appellate Authority may undertake or cause to be undertaken such further inquiry as it considers necessary and thereafter adjudicate the matter on its own merits. The power to remand has been expressly excluded by the legislature.
In view of the express prohibition contained in Section 107(11) of the said Act, remand was not a course of action available to the Appellate Authority. Having accepted the petitioners’ contention on merits and having recorded a finding that the excess Input Tax Credit had already been reversed, the Appellate Authority ought to have brought the appellate proceedings to their logical conclusion by appropriately modifying the demand. It could not have relegated the petitioners to the Adjudicating Authority for such purpose. The impugned direction of remand is, therefore, contrary to the express statutory mandate and cannot be sustained in law.
The contention advanced by the learned Additional Advocate General that the order rejecting the rectification application has merged with the Order-in-Appeal, thereby requiring the petitioners to pursue the statutory appellate remedy, does not merit acceptance. The defect in the Order-in-Appeal is not one relating to appreciation of evidence or determination of the merits of the controversy. Rather, it arises from the Appellate Authority having exercised a jurisdiction that the statute expressly withholds. A direction of remand issued in the face of the prohibition contained in Section 107(11) of the said Act is wholly without jurisdiction and is, consequently, a nullity in the eye of law. Such a jurisdictional infirmity cannot be cured, nor can the illegality be rendered immune from judicial scrutiny, merely because an application for rectification came to be rejected on the ground of limitation. It is well settled that the existence of an alternative statutory remedy does not constitute an absolute bar to the exercise of the writ jurisdiction of this Court, particularly where the impugned action is ex facie without jurisdiction or in patent violation of an express statutory provision. The submission advanced on behalf of the Revenue is, accordingly, rejected.
Accordingly, the operative portion of the Order-in-Appeal dated May 20, 2024, insofar as it directs remand of the matter to the Adjudicating Authority, is set aside. Consequently, the order dated September 16, 2025, rejecting the petitioners’ application for rectification, is also set aside.
The matter is remitted to the Appellate Authority (respondent no. 3) for fresh consideration. The Appellate Authority shall decide the appeal afresh on the basis of the findings already recorded in the Order-in-Appeal dated May 20, 2024, and shall pass a reasoned order strictly in conformity with the mandate of Section 107(11) of the said Act, without remanding or otherwise referring the matter to the Adjudicating Authority.
The Appellate Authority shall afford the petitioners a reasonable opportunity of hearing and conclude the appellate proceedings in accordance with law as expeditiously as possible, preferably within a period of eight weeks from the date of communication of this order.
With the aforesaid observations and directions, WPA 2357 of 2025 stands disposed of.
Urgent Photostat certified copy of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.
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