Appeals under GST

By | September 6, 2016

APPEALS UNDER GST

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Appeals against adjudication order

GST Model Law, 2016 makes provisions in respect of appeals against orders passed by adjudicating authority.

The CGST law makes provisions of first appeal before ‘First Appellate Authority’ and second appeal before ‘National Goods and Service Tax Appellate Tribunal’ (Appellate Tribunal).

In CGST, as per the provisions of GST Model Law, 2016, there will be two appeals First Appellate Authority will be departmental officer. In CGST, the officer will have to be of higher rank if he has to hear appeal against order of Commissioner.

In SGST, First Appellate Authority should be of one rank lower that Commissioner of SGST.

The Appellate Tribunal will be common for CGST and SGST. The Appellate Tribunal will have Member (Judicial), Member (SGST) and Member (CGST). Thus, Appellate Tribunal will have a three member bench.

Small matters upto Rs 10 lakhs can be decided by single member bench of Appellate Tribunal.

There is provision of mandatory pre-deposit for filing appeal. For first appeal, it is equal to 10% of disputed liability consisting of tax, input tax credit and penalty.

For appeal before Appellate Tribunal, again 10% of disputed liability consisting of tax, input tax credit and penalty.

In case of SGST, entire amount of admitted liability (including tax, interest, fee and fine) plus 10% of disputed liability consisting of tax, input tax credit and penalty is payable.

Appeal against order of Appellate Tribunal can be before High Court only if substantial question of law is involved. However, if the matter involves about differences in Centre and State about intra-state transaction or place of supply, appeal will cannot be filed before High Court – clause 87 of GST Model Law, 2016.

Appeal against order of High Court can be filed before Supreme Court – clause 88(1) of GST Model Law, 2016.

If the matter involves about differences in Centre and State about intra-state transaction or place of supply, appeal will cannot be filed before High Court. In such case, the appeal will lie directly before Supreme Court – clause 88(1) of GST Model Law, 2016.

Department cannot file appeal if amount is below specified limit

The Board or the State Government may, on the recommendation of the Council, from time to time, issue orders or instructions or directions fixing such monetary limits, as it may deem fit, for the purposes of regulating the filing of appeal or application by the GST officer under the provisions of this Chapter – clause 92(1) of GST Model Law, 2016.

It shall not preclude such GST officer from filing appeal or application in any other case involving the same or similar issues or questions of law.

No person, being a party in appeal or application shall contend that the GST officer has acquiesced in the decision on the disputed issue by not filing an appeal or application.

Thus, non-filing of appeal by department cannot be used as precedent.

The Appellate Tribunal or court hearing such appeal or application shall have regard to the circumstances under which appeal or application was not filed by the GST Officer in pursuance of the orders or instructions or directions.

Non Appealable decisions and orders

As per clause 93 of GST Model Law, 2016, no appeal shall lie against any decision taken or order passed by a GST officer if such decision taken or order passed relates to any one or more of the following matters —

(a) An order of the Commissioner or other competent authority for transfer of proceeding from one officer to another officer
(b) An order pertaining to the seizure or retention of books of account, register and other documents; or
(c) An order sanctioning prosecution under the Act; or
(d) An order passed under section 55 [order granting or not granting instalments for payment of taxes].

These are overriding provisions. Of course writ jurisdiction of High Court and Supreme Court is not affected.

Exclusion of time taken for copy

In computing the period of limitation prescribed for an appeal or application under this Chapter, the day on which the order complained of was served, and if the party preferring the appeal or making the application was not furnished with a copy of the order when the notice of the order was served upon him, the time required for obtaining a copy of such order, shall be excluded – clause 91 of GST Model Law, 2016.

 Interest on delayed refund of pre-deposit

Where an amount deposited by the appellant is required to be refunded consequent to any order of the First Appellate Authority or of the Appellate Tribunal, interest at the rate specified under section 39 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount – clause 85 GST Model Law, 2016.

Appeals to First Appellate Authority under GST

Any person aggrieved by any decision or order passed against him under this Act by an adjudicating authority, may appeal to the prescribed First Appellate Authority – clause 79(1) of GST Model Law, 2016.

Departmental appeal – The Commissioner of GST may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority has passed any decision or order under this Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any GST Officer subordinate to him to apply to the First Appellate Authority for the determination of such points arising out of the said decision or order as may be specified by the Commissioner of GST in his order – clause 79(2) of GST Model Law, 2016.

This will be considered as appeal before First Appellate Authority.

Under SGST, there is no provision for filing appeal by department. However, there is provision of revision by Commissioner of SGST.

Appeal in prescribed form and verified – Every appeal under this section shall be in the prescribed form and shall be verified in the prescribed manner- clause 79(5) of GST Model Law, 2016

Time limit for filing appeal – Every appeal under this section shall be filed within three months from the date on which the decision or order sought to be appealed against is communicated to the Commissioner of GST, or the person preferring the appeal.

The First Appellate Authority may allow appeal to be presented within a further period of one month, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months – clause 79(4) of GST Model Law, 2016.

It has been consistently held that First Appellate Authority has no powers to admit appeal after 4 months (3 + extension upto one month).

Mandatory pre-deposit before filing appeal before first appellate authority – Appeal cannot be filed unless the appellant has deposited a sum equal to ten percent of the amount in dispute arising from the said order, in relation to which the appeal has been filed.

“Amount in dispute” shall include –

(i) amount determined under section 46 or 47 or 48 or 51

(ii) amount payable under rule of the GST Credit Rules 201…; and

(iii) amount of fee levied or penalty imposed – clause 79(6) of GST Model Law, 2016

Opportunity of hearing – The First Appellate Authority shall give an opportunity to the appellant of being heard, if he so desires.

Upto three Adjournment of hearing – The First Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing. However, no such adjournment shall be granted more than three times to a party during hearing of the appeal – clause 79(9) of GST Model Law, 2016.

Additional grounds at the time of hearing – The First Appellate Authority may, at the hearing of an appeal, allow an appellant to go into any ground of appeal not specified in the grounds of appeal, if he is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

Order by First Appellate Authority – The First Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against.

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.

First Appellate Authority can increase demand of tax or payment of wrongly availed input tax credit after giving show cause notice. However, such order has to be passed within the time limit specified under section 51 [3 or 5 years as applicable]

The order of the First Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision.

Time limit for passing order – The First Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed. If the issuance of order is stayed by an order of a Court or Tribunal, the period of such stay shall be excluded in computing the period of one year.

Distribution of copies of order – The First Appellate Authority shall communicate the order passed by him to the appellant and to the adjudicating authority.

A copy of the order passed by the First Appellate Authority shall also be sent to the jurisdictional Commissioner of CGST or the authority designated by him in this behalf and the jurisdictional Commissioner of SGST or the authority designated by him.

Order final if not appealed against – Every order passed under this section shall, subject to the provisions of section 83, 87 or 88, be final – clause 79(12) of GST Model Law, 2016.

First Appellate Authority cannot remand – The First Appellate Authority cannot remand the matter, as this power is not given to him by Statute. Power to remand has been specifically given to Appellate Tribunal.

Revisional powers of Commissioner in case of SGST

There is no provision for filing departmental appeal before First Appellate Authority in case of SGST.

However, there is provision for revision by Commissioner of SGST.

The Commissioner of SGST may on his own motion or upon information received by him, call for and examine the record of any proceeding under this Act, and if he considers that any decision or order passed under this Act by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of the revenue, 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 making such further inquiry as may be necessary, pass such order, as he thinks just and proper, including enhancing or modifying or annulling the said decision or order – clause 80(1) of GST Model Law, 2016.

‘Decision’ shall include intimation given by any officer subordinate to the Commissioner – clause 80(7) of GST Model Law, 2016.

Thus, Commissioner can exercise powers even before adjudicating authority has passed order.

The Commissioner of SGST shall not exercise any power of revision if.-

(a) the order has been subject to an appeal under section 79 or under section 82 or under section 87 or under section 88; or

(b) more than three years have expired after the passing of the decision or order sought to be revised.

Thus, if taxable person has apprehension that the order of SGST officer is likely to be revised, he should immediately file appeal before First Appellate Authority.

If any point is not covered in appeal of taxable person, Commissioner of SGST can exercise powers of revision – clause 80(3) of GST Model Law, 2016.

Appeal against order of revision by Commissioner, SGST can be filed before Appellate Tribunal.

The time limit of three years will not apply if there was decision which is prejudicial to the interest of revenue in some other proceedings and an appeal filed by department is pending.

The time limit will also not apply if stay was granted by Court or Appellate Tribunal.

Constitution of the National Appellate Tribunal

The Central Government shall on the recommendation of the GST Council constitute a National Goods and Services Tax Appellate Tribunal (hereinafter referred to as the Appellate Tribunal) – clause 81 of GST Model Law, 2016.

The Appellate Tribunal shall be headed by a National President.

The Appellate Tribunal shall have one branch for each state, which shall be called as the State GST Tribunal.

Every State GST Tribunal will be headed by a State President.

Every State GST Tribunal shall consist of as many Members (Judicial), Members (Technical – CGST) and Members (Technical – SGST) as may be prescribed, to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act.

The qualifications, eligibility conditions and the manner of selection and appointment of the National President, the State Presidents, and the Members shall be such as may be prescribed on the recommendations of the Council.

The National President and the State Presidents shall exercise such powers and discharge such functions as may be prescribed on the recommendations of the Council.

On ceasing to hold office, the National President, the State Presidents or other Members of the Appellate Tribunal shall not be entitled to appear, act or plead before the Appellate Tribunal.

Appeal to Appellate Tribunal

Any person aggrieved by an order passed against him under section 79 (by First Appellate Authority) may appeal to the Appellate Tribunal against such order – clause 82(1) of GST Model Law, 2016.

Refusal of petty appeals – The Appellate Tribunal may, in its discretion, refuse to admit any such appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined by such order, does not exceed one lakh rupees – clause 82(2) of GST Model Law, 2016.

The word used is ‘or’. Hence, even if total demand exceeds Rs one lakh, if individual amounts are less than Rs one lakh, appeal can be refused.

Departmental appeal – The Board (CBE&C) may by order constitute such Committees as may be necessary for the purposes of filing appeals against the orders of the First Appellate Authority. Every such Committee shall consist of two designated officers of GST.

The Committee of designated officers of GST may, if it is of the opinion that an order passed by the First Appellate Authority under sub-section (10) of section 79, is not legal or proper, direct any GST Officer authorized by it in this behalf to apply to the Appellate Tribunal for the determination of such points arising out of the order passed by the First Appellate Authority as may be specified by the Committee in its order:

Where the Committee of designated officers of GST differs in its opinion, it shall be deemed that the Committee has formed the opinion that the order under review is not legal or proper – clause 82(4) of GST Model Law, 2016.

This will be considered as appeal against decision of First Appellate Authority.

There is no provision for filing departmental appeal under SGST.

Time limit for filing appeal – Every appeal under this section shall be filed within three months from the date on which the order sought to be appealed against is communicated to the Commissioner of GST, or, as the case may be, the person preferring the appeal – clause 82(6) of GST Model Law, 2016.

Appellate Tribunal can condone delay in filing of appeal or cross objection, if it is satisfied that there was sufficient cause for not presenting it within specified period – clause 82(8) of GST Model Law, 2016.

Cross objection – On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, within forty-five days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner. Cross objection can be filed even if he has not have appealed against such order – clause 82(7) of GST Model Law, 2016.

Appeal in prescribed form with fees – An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by a prescribed fee. – – However, no fee is payable in case of departmental appeal.

Mandatory pre-deposit before filing appeal before first appellate tribunal – Appeal cannot be filed unless the appellant has deposited a sum equal to ten percent of the amount in dispute arising from the said order, in relation to which the appeal has been filed.

“Amount in dispute” shall include –

(i) amount determined under section 46 or 47 or 48 or 51

(ii) amount payable under rule of the GST Credit Rules 201…; and

(iii) amount of fee levied or penalty imposed – clause 82(10) of GST Model Law, 2016.

This pre-deposit should be in addition to pre-deposit made while filing appeal before First Appellate Authority [though the provision does not specifically say so]

Fee for filing miscellaneous applications -Every application made before the Appellate Tribunal for

(a) in an appeal for rectification of mistake or for any other purpose; or

(b) for restoration of an appeal or an application, shall be accompanied by a prescribed fee :

No fee is payable if application is filed by department – clause 82(10) of GST Model Law, 2016.

Orders of Appellate Tribunal

The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the First Appellate Authority or to the original adjudicating authority, with such directions as it may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary – clause 83(1) of GST Model Law, 2016.

Appellate Tribunal can give upto three adjournments.

The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed – clause 83(4) of GST Model Law, 2016.

Distribution of copies of order of Appellate Tribunal – The Appellate Tribunal shall send a copy of every order passed under this section to the First Appellate Authority, or to the original adjudicating authority, as the case may be, the appellant, the jurisdictional Commissioner of CGST and the jurisdictional Commissioner of SGST – clause 83(4) of GST Model Law, 2016.

Appellate Tribunal can rectify order apparent from records

The Appellate Tribunal may amend any order passed by it, so as to rectify any mistake apparent from the record.

Rectification can be done only if such mistake is noticed by it on its own accord, or is brought to its notice by the Commissioner of GST or the other party to the appeal within a period of three months from the date of the order.

Amendment which has the effect of enhancing an assessment or reducing a refund or input tax credit or otherwise increasing the liability of the other party, shall not be made, unless the Appellate Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard – proviso to clause 83(1) of GST Model Law, 2016.

Rectified order cannot be further rectified – Rectification can be done only when order is passed under section 83(1). Hence, rectified order cannot be further rectified.

Procedure of Appellate Tribunal

Appellate Tribunal functions through benches constituted by the National President or the State Presidents from amongst the members of Appellate Tribunal – clause 84(1) of GST Model Law, 2016.

Benches of Appellate Tribunal – A Bench shall normally consist of one Member (Judicial), one Member (Technical – CGST) and one Member (Technical -SGST) – clause 84(2) of GST Model Law, 2016. – – However, in following cases, single member bench can be constituted.

Where in any disputed case, the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty involved, does not exceed ten lakh rupees, single member bench can be constituted by National President or a State President. They themselves can sit as single member bench or authorize any other member of the Appellate Tribunal – clause 84(3) of GST Model Law, 2016.

Decision of Appellate Tribunal by majority – If there is difference of opinion, decision will be by majority.

Reference to another member if bench equally divided – If the members of a Bench are equally divided, they shall state the point or points on which they differ and make a reference to the National President or the State President who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other members of the Appellate Tribunal. Such point or points shall be decided according to the opinion of the majority of these members of the Appellate Tribunal who have heard the case, including those who first heard it – clause 84(4) of GST Model Law, 2016.

Functioning of Appellate Tribunal – The Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings – clause 84(5) of GST Model Law, 2016.

Powers of Appellate Tribunal – The Appellate Tribunal shall, for the purposes of discharging its functions, have the same powers as are vested in a court under the Code of Civil Procedure, 1908, when trying a suit in respect of the following matters –

(a) discovery and inspection

(b) enforcing the attendance of any person and examining him on oath

(c) compelling the production of books of account and other documents; and

(d) issuing commissions – clause 84(6) of GST Model Law, 2016.

Proceedings before Appellate Tribunal are judicial proceedings – Any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed to be a Civil Court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974) – clause 84(7) of GST Model Law, 2016.

Appearance by authorised representative

Any person who is entitled or required to appear before a GST Officer appointed under this Act, or the First Appellate Authority or the Appellate Tribunal in connection with any proceedings under the Act, may appear through an authorized representative, except when required under this Act to appear personally for examination on oath or affirmation – clause 86(1) of GST Model Law, 2016.

Who can be authorized representative :

“Authorised representative” can be any of following —

(a) his relative or regular employee; or
(b) an advocate who is entitled to practice in any court in India, and who has not been debarred from practicing before any court in India; or
(c) any chartered accountant, a cost accountant or a company secretary, who holds a valid certificate of practice and who has not been debarred from practice; or
(d) any person who has acquired such qualifications as the Central Government (or the State Government) may, on the recommendation of the Council, prescribe for this purpose.

Gazetted officer cannot appear for one year after retirement or resignation – Notwithstanding anything contained in this section, no person who was serving in the indirect tax departments of the Government of India or of any State Government, and has retired or resigned from such service after having served for not less than two years as a Gazetted officer in that department shall be entitled to appear as an authorised representative in any proceedings before a GST Officer for a period of one year from the date of his retirement or resignation, as the case may be.

Who cannot be appointed as authorized representative

Following cannot be appointed as authorized representative.

(a) who has been dismissed or removed from government service for all times ; or
(b) who is convicted of an offence connected with any proceeding under this Act, the Customs Act, 1962 (52 of 1962), the Central Excise Act, 1944 (1 of 1944) or Chapter V of the Finance Act 1994 (25 of 2014) or under any of the Acts passed by a state legislature dealing with the imposition of taxes on sale of goods or supply of goods and/or services, for such time as the Commissioner of GST or the competent authority may determine or
(c) who has become an insolvent, for the period during which the insolvency continues.

Person found guilty of misconduct – If any person is found guilty of misconduct by the prescribed authority in connection with any proceedings under this Act or under any of the Acts referred to in clause (b) of sub-section (4), the prescribed authority may direct that he shall thenceforth be disqualified to represent any person. Such order can be passed only after giving personal hearing – clause 86(6) of GST Model Law, 2016.

Appeal to the High Court

The Commissioner of GST or the other party aggrieved by any order passed by the Appellate Tribunal under section 83 may file an appeal to the High Court and the High Court may admit such appeal if it is satisfied that the case involves a substantial question of law – clause 87(1) of GST Model Law, 2016.

No appeal before High Court if dispute between State and Centre – No appeal shall lie to High Court against an order passed by the Appellate Tribunal under section 83 if such order relates, among other things, to

(i) a matter where two or more States, or a State and Center, have a difference of views regarding the treatment of a transaction(s) being intra-State or inter-State; or

(ii) a matter where two or more States, or a State and Center, have a difference of views regarding place of supply – clause 87(2) of GST Model Law, 2016.

In such case, appeal lies directly before Supreme Court.

Provisions relating to appeal before High Court – An appeal under section shall be filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of GST or the other party. It should be accompanied by a prescribed fee and in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.

The High Court may admit an appeal after the expiry of the period of one hundred and eighty days, if it is satisfied that there was sufficient cause for not filing the same within that period- clause 87(4) GST Model Law, 2016.

The provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section- clause 87(12) GST Model Law, 2016.

High Court can formulate the question – Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:

Court can to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.

The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit- clause 87(7) GST Model Law, 2016.

High Court can determine any other issue – The High Court may determine any issue which –

(a) has not been determined by the Appellate Tribunal; or

(b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as herein referred to above- clause 87(8) GST Model Law, 2016.

Appeal to be heard by bench of at least two judges – When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges- clause 87(9) GST Model Law, 2016.

Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only, by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it- clause 87(10) GST Model Law, 2016.

Action on basis of certified copy of High Court – Where the High Court delivers a judgment in an appeal filed before it under this section, effect shall be given to such judgment by either side on the basis of a certified copy of the judgment – clause 87(11) GST Model Law, 2016.

Appeal to the Supreme Court

An appeal shall lie to the Supreme Court from any judgment or order passed by the High Court in an appeal made under section 87, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment or order, the High Court certifies to be a fit one for appeal to the Supreme Court – clause 88(1) of GST Model Law, 2016.

An appeal shall lie to the Supreme Court from any order passed by the Appellate Tribunal under section 83 where such order is of the nature referred to in section 87(2) – clause 88(2) of GST Model Law, 2016 [This covers dispute between State and Centre].

Hearing before Supreme Court

The provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under section 88 as they apply in the case of appeals from decrees of a High Court – clause 89(1) of GST Model Law, 2016.

This will not affect the provisions of section 90 [This section states that sums due to Government are to be paid even if appeal is filed before High Court or Supreme Court.

The costs of the appeal shall be at the discretion of the Supreme Court.

Where the judgment of the High Court is varied or reversed in the appeal, effect shall be given to the order of the Supreme Court in the manner provided in section 87 in the case of a judgment of the High Court i.e. on basis of certified copy.

 Sums due to be paid notwithstanding appeal etc.

Notwithstanding that an appeal has been preferred to the High Court or the Supreme Court, sums due to the Government as a result of an order passed by the Appellate Tribunal under sub-section (1) of section 83 or an order passed by the High Court under section 87, as the case may be, shall be payable in accordance with the order so passed – clause 90 of GST Model Law, 2016.

Of course, High Court and Supreme Court can grant stay in appropriate cases.

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