The Calcutta High Court has reaffirmed that an Appellate Authority under Section 107 of the Goods and Services Tax (GST) laws has no power to remand a matter back to the Adjudicating Authority, holding that such a course of action is expressly prohibited by Section 107(11) of the CGST/WBGST Act.

The bench of Justice Kausik Chanda set aside the remand direction issued by the appellate authority and directed it to decide the appeal on merits itself. 

The petitioner challenged an Order-in-Appeal passed by the Additional Commissioner, State Tax, acting as the Appellate Authority under Section 107 of the West Bengal GST Act and the Central GST Act.

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The dispute originated from an ex parte Order-in-Original whereby the Adjudicating Authority confirmed a GST demand of ₹18.19 lakh, including tax, interest and penalty, for the financial year 2017–18. The demand primarily related to alleged short payment of GST on outward supplies; and alleged excess availment of Input Tax Credit (ITC). 

Aggrieved by the order, the taxpayers preferred a statutory appeal under Section 107 of the GST Act.

While deciding the appeal, the Appellate Authority accepted that the taxpayers should produce supporting documents before the Adjudicating Authority for allowing admissible ITC and settling the matter. According to the petitioners, this effectively amounted to remanding the proceedings, something that the Appellate Authority was not legally empowered to do.

The taxpayers subsequently filed a rectification application under Section 161, arguing that the remand direction constituted an error apparent on the face of the record. However, the application was rejected solely because it had been filed beyond the statutory limitation period of six months, without examining the jurisdictional issue raised. 

The State argued that once the rectification application had been rejected, that order merged with the original appellate order. Consequently, according to the Revenue, the taxpayers ought to pursue the statutory appellate remedy instead of invoking the High Court’s writ jurisdiction.

The State therefore contended that the High Court should decline interference with the appellate order. 

The principal issue before the Court was whether the GST Appellate Authority possesses the power to remand a matter to the Adjudicating Authority.

After examining Section 107(11), the Court observed that the statute authorizes the Appellate Authority only to confirm the order, modify the order, or annul the order.

Although the Appellate Authority may conduct or direct further inquiry wherever necessary, the provision expressly prohibits referring the matter back to the authority that passed the original order. 

The Court observed that once the Appellate Authority had accepted the taxpayers’ contention regarding reversal of excess ITC, it was required to bring the appellate proceedings to their logical conclusion by modifying the demand itself. Instead, by directing the taxpayers to appear before the Adjudicating Authority, it effectively exercised a power that the legislature had deliberately withheld.

Accordingly, the Court held that the remand direction was contrary to the express mandate of Section 107(11) and therefore unsustainable in law. 

Rejecting the department’s objection, the High Court held that the defect was not merely procedural but jurisdictional.

The Court observed that an authority exercising a power expressly barred by statute acts without jurisdiction, rendering such an order a nullity. Consequently, rejection of the rectification application on limitation could not validate an order passed without legal authority.

The Court further reiterated the settled principle that the existence of an alternative statutory remedy does not bar the High Court from exercising writ jurisdiction where an authority has acted without jurisdiction or in clear violation of a statutory provision. 

Allowing the writ petition, the High Court set aside the portion of the Order-in-Appeal directing remand to the Adjudicating Authority; quashed the subsequent order rejecting the rectification application; and remitted the appeal back to the Appellate Authority for fresh adjudication.

The Court directed the Appellate Authority to decide the appeal afresh on the basis of the findings already recorded, strictly in accordance with Section 107(11), without remanding the matter to the Adjudicating Authority.

It also directed that the appeal be disposed of after granting the taxpayers a reasonable opportunity of hearing, preferably within eight weeks from communication of the High Court’s order.

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