S.107 CGST Act | Appellate Authority Cannot Suo Moto Enhance Tax Liability: Calcutta HC

The Calcutta High Court recently set aside an order of the GST Appellate Authority, suo motu enhancing tax liability on an assessee, without following the procedure under Section 107(11) of the CGST/ WBGST Act.

Section 107 of the Act prescribes procedure for filing and adjudication of appeals by the Appellate Authority. Sub-section 11 thereof stipulates that the Appellate Authority can confirm, modify or annul the order appealed against, provided that an order enhancing any fee/ penalty/ fine shall not be passed unless the appellant is given a reasonable opportunity of hearing.

In the case at hand, the tax initially quantified on the assessee (appellant) by the assessing officer was Rs.2,58,536.80. However, while imposing the penalty, the assessing officer imposed a penalty on the sum of Rs.41,83,804.72. 

This order was put to challenge by filing a statutory appeal. The Appellate Authority however, suo-motu enhanced the tax liability on the assessee, who then approached the High Court.

A single bench of the High Court stayed the order of appellate authority, subject to payment of 10% of disputed tax. It is challenging this order that the present intra-court appeal was preferred.

At the outset, the division bench of Chief Justice T. S. Sivagnanam and Justice Bivas Pattanayak observed that the order passed by the appellate authority, to the extent it suo motu enhanced tax liability, “is not tenable in law”.

So far as determination of tax liability is concerned, the bench set aside the orders passed by the appellate authority as well as the adjudicating authority and remanded the matter back for fresh consideration, in light of some subsequent events.

“In respect of the same period, another notice was issued by the Deputy Commissioner and it appears that due to inadvertence or wrong advice the appellant/assessee had paid the tax. When this was pointed out by the department, the adjudicating authority, namely, the Assistant Commissioner of Revenue (WBGST) passed a closing order on 22.07.2024. Therefore, the impact of the closing order on the present liability also has to be examined afresh,” it said and allowed the appeal.

Appearance: Advocates Himangshu Kumar Ray, Shiwani Shaw, Subhasis Podder, Amit Saha and Piyas Chowdhury for Appellant; Advocates T.M. Siddiqui, T. Chakraborty and S. Sanyal for State

Case title: Hriday Kumar Das Vs State of West Bengal

Case no.: FMA/1168/2024

Click Here To Read/Download Order