Kerala SGST Dept Becomes First in India to Implement Faceless Adjudication for Indirect Tax Matters [Read Press Release]

The Kerala State Good sand Services Tax (SGST) Department is leading the way for revamping the way indirect tax adjudication is carried out, becoming the first in the country to implement faceless adjudication for indirect tax matters.

As per a press release dated July 31, 2025, the new adjudication framework aims to streamline and digitise the adjudication process, greatly reducing the need for physical interaction between taxpayers and tax officers - all while ensuring greater transparency, consistency and procedural fairness in adjudication.

The regular tax adjudication process has often been marred with complaints of inefficiency, lack of accountability and traceability. Faceless adjudication is defined as a policy-based, transparent and digitally-enabled mechanism in which all communications between the taxpayer and the adjudicating authority including the issuance of Show Cause Notices (SCNs), reply submissions, hearings, documentary filings, and final order reviews shall all be conducted online.

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The revamped process completely eliminates the necessity of face-to-face interactions by relying on e-communication and virtual meetings. The adjudication wing of the Kerala SGST Department will handle all such matters through the faceless system from August 1, 2025

The initiative will be introduced in a phased manner, with the first phase covering matters arising out of scrutiny, audit, and investigation in Pathanamthitta and Idukki districts. This key reform was announced during the 2025 Budget Speech by the State Finance Minister, K.N. Balagopal and has now been operationalised following formal instructions from the Commissioner of State GST.

The department has taken into account the numerous hardships faced by taxpayers including the overlooking of documentary evidence, inconsistency in decisions and denial of adequate opportunity for taxpayers to respond. These issues have contributed to innumerous delays and legal disputes, pouring over into the Tribunals and Courts.

Faceless adjudication seeks to resolve these problems by instituting a uniform, rule-based system that is guided by technology and expert oversight. The move is in alignment with Kerala State’s commitment to the Government of India’s "Ease of Doing Business" policy to create an industry-friendly, reliable and trustworthy tax administration environment.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

As per the current GST framework, tax is levied on the principle of self-assessment. Once a return is filed by a taxpayer, it is deemed correct until proven otherwise through official scrutiny, audit or investigation. If tax evasion is suspected, a show cause notice shall be issued with supporting evidence.

Under the new faceless model, taxpayers may submit responses and documents via the GST Common Portal and participate in virtual hearings through online platforms or telephonic communication under the supervision of a designated "Faceless Adjudicating Authority".

The department has also noted that while a similar mechanism exists under the Income Tax regime at the central level, Kerala is the first state in India to adopt such a model under the GST law. This initiative from down south is expected to inspire other state indirect tax adjudicatory bodies to follow suit.

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