Limited Remanding Power of Appellate Authority under Section 107(11) GST Act: A Detailed Analysis

When a taxpayer challenges an assessment or penalty order under the Goods and Services Tax law, the first appeal lies to the “Appellate Authority” under Section 107 of the Central Goods and Services Tax Act, 2017. On paper, this looks like a regular appeal stage. In reality, the scope of what the Appellate Authority can do is tightly defined, especially under sub section (11).

Section 107(11) reads:

“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 adjudicating authority that passed the said decision or order...”

The provision then adds two important provisos about increasing tax or penalty liability, which require prior notice and compliance with time limits in section 73 or section 74.

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And, the Appellate Authority can confirm, modify or annul. It cannot remand the matter back to the original adjudicating officer. This is not an inference or judicial gloss. It is stated expressly in the statute.

What the Appellate Authority can do:

• Confirm the original order entirely.
• Modify it, for example by reducing the tax demand, deleting a penalty, or changing findings.
• Annul it, meaning cancel it in full.
• Make further inquiries itself before deciding.
• In cases of under assessment or short payment identified during the appeal, issue its own show cause notice and decide the matter within the statutory time frame under section 73 or 74.

What the Appellate Authority cannot do:

• Send the case back to the original adjudicating authority for reconsideration.
• Avoid deciding the matter on merits by simply ordering a fresh adjudication.
• Increasing liability without following the strict procedure in the provisos.

How Courts Have Read Section 107(11)

The Supreme Court got involved in Bimla Pulp and Papers Pvt Ltdvs. Additional Commissioner (2025). Here, the taxpayer claimed it was denied cross-examination of witnesses in the original proceedings. The Supreme Court acknowledged that the absence of remand power under Section 107(11) could make the appeal process ineffective for curing procedural lapses. It held that in such cases, the taxpayer is free to approach the High Court for relief, since the High Court can quash and remand where needed.

In Hriday Kumar Das vs. State ofWest Bengal (Calcutta HC, 2024), the court ruled that an Appellate Authority cannot suo motu enhance tax liability without following the strict procedure in Section 107(11). In that case, the original tax demand was about Rs. 2.58 lakh, but a much higher penalty was calculated on over Rs. 41.83 lakh. On appeal, the authority went further and increased the tax liability on its own. The High Court found this “not tenable in law,” set aside both the appellate and original orders, and because of later developments, remanded the case for fresh consideration.

In Sreenidhi International Pvt.Ltd. vs. Joint Commissioner of Central Tax (Telangana HC, 2024), the petitioner claimed its activities were exempt under GST Notification No. 12/2017 and that a similar earlier notice had been dropped. The adjudicating authority ignored these points and based its findings only on the show-cause notice. The court said this breached natural justice and involved a jurisdictional question going to the root of the matter. Since Section 107(11) prevents the appellate body from remanding, the High Court intervened directly, set aside the order, and sent it back to the original authority for reconsideration.

In the case of Kronos Solutions India Private Limited vs. Union of India (2024), the Allahabad High Court said the Appellate Authority cannot remand the case for a new trial. They set aside a remand order and told the authority to decide it properly themselves. The court pointed out that the law clearly bars sending it back, even if there are gaps in evidence.

These cases show a pattern: Courts stick to the words of the law. But in extreme cases, like big procedural errors, people can file writ petitions in the High Courts under the Constitution. This bypasses the appeal and asks for direct justice.

The Provisos: Procedural Guardrails on Enhancement

The two provisos to section 107(11) add important procedural safeguards:

• If the appellate authority wants to increase a penalty, impose confiscation of higher value goods, reduce a refund, or cut down input tax credit, it must first give the appellant a reasonable opportunity to show cause.
• If the appellate authority finds during the appeal that tax has not been paid or has been wrongly refunded, it must issue a show cause notice and decide within the limitation periods in section 73 or 74.

Courts have been strict on these points. Enhancement orders without proper notice or beyond the limitation period have been set aside.

The Practical Problem: When a Remand is Needed

Because section 107(11) bars remand, the appellate authority is expected to either fix the order or strike it down. This works when the record is sufficient to decide. It does not work well when there are deep procedural flaws, missing evidence, or the need for detailed fact finding.

In such cases, the practical solution that has evolved is to move the High Court under Article 226 of the Constitution. High Courts are not bound by the statutory bar in section 107(11) and can quash the flawed order and remand to the adjudicating authority for fresh consideration. Courts have justified this on the ground that the appellate authority is prevented by statute from doing so, and therefore writ jurisdiction is needed to prevent injustice.

Practical Playbook for Taxpayers and Practitioners

• In your appeal grounds, do not simply ask for “remand.” Instead, ask the appellate authority to annul the original order if there are natural justice violations. This fits within section 107(11).
• If you want the appellate authority to change findings or amounts, frame it as a request for modification based on the record or based on further inquiry that the appellate authority itself can make.
• Watch for any attempt to enhance liability without proper show cause notice or without keeping within the limitation under sections 73 and 74. These are strong grounds for challenge.
• If the problem with the original order is deep and cannot be cured by the appellate authority within its powers, consider approaching the High Court directly to seek quash and remand.

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