GST UPDATE No 250 ON CONTROVERSY REGARDING ADJUDICATING AUTHORITY

The meaning of adjudicating authority is very important, particularly when we talk about litigation framework in GST. The provision contained in section 107 pertaining to appeals to appellate authority state that any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person. Hence, in order to prefer an appeal before the appellate authority, the order should be passed by adjudicating authority. In our earlier GST update we had analysed the decision given by hon’ble Uttarakhand High Court in the case of VINOD KUMAR VERSUS COMMISSIONER UTTARAKHAND wherein writ petition filed was contested by the department on the grounds of alternate remedy available. However, hon’ble Uttarakhand High Court at Nainital concluded that “Commissioner” is excluded from the definition of ‘adjudicating authority’ under section 2(4) of the Uttarakhand Act and so the order passed is not appealable under section 107 of the CGST Act, 2017 by placing reliance on the Apex Court decision in the case of RADHA KRISHNA INDUSTRIES V/S STATE OF HIMACHAL PRADESH AND OTHERS. The reasoning adopted and the implications of the same are subject matter of discussion of our present GST update.

The hon’ble Supreme Court in the case of RADHA KRISHNA INDUSTRIES V/S STATE OF HIMACHAL PRADESH AND OTHERShad deliberated on the issue that whether the provisional attachment order passed under section 83 of the CGST Act, 2017 by the Commissioner was appealable under section 107 of the CGST Act, 2017. It was held that as per the definition of adjudicating authority given under section 2(4) of the HPGST Act, 2017, “adjudicating authority”means any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Commissioner, Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal”. Accordingly, the Commissioner or its delegate such as Joint Commissioner was not treated as adjudicating authority and so the order passed by them were not appealable under the section 107 of the CGST Act, 2017. This analogy was followed by the Hon’ble Uttarakhand High Court by holding that the order of cancellation of registration passed by the Assistant Commissioner was not appealable. This is for the reason that when the Commissioner is excluded from the definition of adjudicating authority, its delegate officer will also not be considered as adjudicating authority and so the writ petition is maintainable before the High Court.

It is worth mentioning that appeals are being regularly filed under section 107 of the CGST Act, 2017 which include refund orders being rejected by Assistant Commissioner of GST. Moreover, even appeals against cancellation of GST registration orders passed by the Assistant Commissioners are being filed in the normal course. This anomaly has cropped due to difference in the definition of adjudicating authority in the CGST Act, 2017 and the respective State GST Acts. The definition of adjudicating authority under section 2(4) of the CGST Act, 2017 reads as follows:-
(4) ?adjudicating authority means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171 (Anti-Profiteering);

On the contrary, the definition of adjudicating authority given under section 2(4) of the State GST Act, 2017 reads as follows:-
“adjudicating authority”means any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Commissioner, Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal”

It is submitted that while CGST Act, 2017 excludes the CBIC from the definition of adjudicating authority being the highest one, the State Laws exclude Commissioner from the definition of adjudicating authority which has led to complications in interpretation of the law. It is worth mentioning here that as the hon’ble Supreme Court considered the definition of “adjudicating authority” as per the State GST Law, it has concluded that orders passed by the Commissioner or its subordinates as authorised by Commissioner would not be considered as passed by adjudicating authority and so will not be appealable under section 107 of the CGST Act, 2017.

The above interpretation rendered by the Supreme Court has far reaching consequences as the assessees falling under jurisdiction of State GST Department can contend that the orders passed under the respective State GST Act are not appealable but rather directly approachable to High Court which is not the intention of the legislature. This view will collapse the entire appellate machinery evolved in the GST regime as it will render almost all orders as non-appealable because the provisions of CGST Act and State GST Act are applied simultaneously in conjunction with each other.

The GST Law was formulated with the objective of uniform taxation throughout the country but the implementation of CGST Act along with respective State GST Act has led to disparity in various provisions of the law. The definition of “adjudicating authority” plays a crucial role and if the said definition is different in both the Acts, it will definitely be a point of great concern for the assessees. The analogy adopted by the Supreme Court can hamper the normal appeal mechanism prevalent and in operation as on date. It is hoped that the government resorts to prompt action in this regard so that unwarranted litigation is avoided as already High Courts are being flooded with petitions due to non-operation of GST Appellate Tribunal.

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GST UPDATE No 250 ON CONTROVERSY REGARDING ADJUDICATING AUTHORITY

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