GST Appeals and Review Mechanism

GST Appeals and Review Mechanism

A person/assessee who is aggrieved by an order passed against him by an adjudicating authority, can file an appeal to the Appellate Authority. It is significant to understand that it is only the aggrieved person/assessee who can file the appeal. Also, the appeal must be against an order passed under the GST Act. It is to be notable that no appeals can be filed against the following orders:-

  1. A order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer;
  2. A order belonging to the seizure or retention of books of account, register and other documents; or
  3. A order sanctioning prosecution under the Act; or
  4. A order passed under section 80 (payment of tax in installments).

The time limit for the party to file an appeal before the APPELLATE AUTHORITY is 3 months from the date of communication of the impugned order. But the APPELLATE AUTHORITY may condone a delay of up to one month, if he is satisfied that there was sufficient cause for such delay.

The APPELLATE AUTHORITY has to apply the principles of natural justice – such as hearing the appellant, allowing reasonable adjournments (not more than 3), permitting additional grounds (if found reasonable cause), etc.

The APPELLATE AUTHORITY can also make such further inquiry as may be necessary.On conclusion of the appeal process, the APPELLATE AUTHORITY will pass his order (Order-in-Appeal) which may confirm, modify or annul the decision or order appealed against but shall not send the case back to the authority that passed the said order. The APPELLATE AUTHORITY can also increase the “rigour” of the order appealed against by 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, but this can only be done after the APPELLATE AUTHORITY has given to the appellant a reasonable opportunity of showing cause against the proposed order. Further, if 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 claimed or utilized, no order demanding 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 prescribed under section 73 or Section 74 of the CGST Act, 2017.

The Order-in-appeal has to be a “speaking order” i.e. it shall state the points for determination, the decision thereon and the reasons for the decision. The law provides an advisory time limit of 1 year from date of filing of appeal for the APPELLATE AUTHORITY to decide the appeal.

Appeals before Tribunal

The Tribunal is the next /second level of appeal, where the appeals can be filed against the orders-in-appeal passed by the APPELLATE AUTHORITY or order in revision passed by revisional authority, by any person/assessee aggrieved by such an order-in-appeal or Order in revision.

The law envisages constitution of a two tier Tribunal i.e. National Bench/Regional Benches and the State Bench/Area Benches. If place of supply is one of the issues in dispute, then the National Bench/Regional benches of the Tribunal will have jurisdiction/power to hear the appeal. If the dispute belongs to issues other than place of supply, then the State/Area Benches will have the jurisdiction to hear the appeal. An appeal against the decision/order of the National Bench will lie directly to the Supreme Court and an appeal from the decision of the State Bench will lie to the jurisdictional High Court on substantial questions of law.

Appeal to the Tribunal by the aggrieved person/assessee is to be filed within three months from the communication of the order under appeal. Further, Tribunal has the power to condone delay (of up to three months in case of appeals or forty five days in case of cross objections, beyond the mandatory period) on being satisfied that there is sufficient ground for the delay. The Tribunal has the discretion power not to admit any appeal involving amount of Rs. Fifty Thousand or less.

The law also provides for filing of cross-objections by the respondent against such part of the order against which the respondent may initially not have chosen to file an appeal. It is provided that on receipt of notice that an appeal has been filed (by the appellant), the party against whom the appeal has been preferred (i.e. respondent) may, notwithstanding that he may not have appealed against such order or any part thereof, file within 45 days a memorandum of cross-objections against any part of the order appealed against and such memorandum shall be disposed by the Appellate Tribunal as if it were an appeal presented within the time specified for the initial appeal. Condonation of delay (only on sufficient cause) applies here also, but only to the extent of further 45 days from the date of expiry of the period for filing cross objections. The form, fees and etc. for appeals to Tribunal shall be according to as prescribed by Rules.

The Tribunal after hearing of both the parties may pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may be refer the case back to the APPELLATE AUTHORITY or to the revisional authority, or to the original adjudicating authority, with such directions as it deem fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. For reasons of natural justice, it is also provided that the Tribunal may, if sufficient cause is shown, grant up to 3 adjournments to either side.

Appeals by the Department (CGST/SGST)

At times, the Department if it is not in agreed with the order passed by the (initial) adjudicating authority or the appellate authority. The GST Rules provides that in such cases, the Department can file what is commonly known as a “review application/appeal”.

The GST Actprovides the powers to the Commissioner to review any order passed by his subordinates acting either as an adjudicating authority, or the appellate authority or revisional authority. If the Commissioner is the view that any order passed by such subordinatesauthorities are not legal and proper, he can direct any officer subordinate to him to apply to the competent authority. If the order of the appellate authority or the revisional authority is reviewed, he can direct his subordinate to file an appeal before the Tribunal. The grounds for appeal shall be disclosed in his order. The review of order and consequent filing of appeal by subordinate has to be done within a period of six months from the date of communication of the order. The resultant review application is required to be dealt with by the APPELLATE AUTHORITY or the Tribunal as if it were an appeal made against the decision or order of the adjudicating authority and the statutory provisions relating to appeals shall, so far as possible, apply to such application.

Revision by Commissioner (CGST/SGST)

The GST Act also provides for the mechanism of revision, by the Revisional Authority, of the orders passed by his subordinate officers. If the Revisional Authority on examination of the case records is of the view that the decision or order passed by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of the revenue, and it is illegal or improper or has not taken into account material facts, 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 considering such further inquiry as may be necessary, pass such order, as he thinks just legal and proper, including enhancing or modifying or annulling the said decision or order.

The aforementioned power is subject to the condition that non appealable orders and decision cannot be revised. Further the power of revision cannot be exercised if:-

  • the order has been subject to an appeal before APPELLATE AUTHORITY or Tribunal or High Court or Supreme Court; or
  • the period of 6 months (from the date of communication of order) has not yet expired or more than three years have expired after the passing of the decision or order sought to be revised; or
  • the order which has already been taken for revision at an earlier stage; or

(d) the order obtain to be revised is a revisional order in the first place:

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 order 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 order 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 of 3 years where proceedings for revision have been initiated by way of issue of a notice under section 108 of the CGST Act, 2017.

However, the Revisional Authority may pass an order on any point which has not been raised and decided in an appeal before APPELLATE AUTHORITY/Tribunal/HC/SC, before the expiry of a period of 1 year from the date of the order in such appeal or before the expiry of a period of 3 years from the date of initial order, whichever is later.

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