GST UPDATE

Hon’ble Court: Calcutta High Court
Case Title: Shyam Traders & Ors. v. State of West Bengal & Ors.
Petition No. & Citation: WPA 2357 of 2025

Hon’ble Judge(s)
Date of Order	09.07.2026
Outcome	Petition allowed by way of Remand

Brief Facts of the Case

The dispute originated from an ex parte Order-in-Original passed under Section 73(9), whereby tax, interest and penalty were confirmed on allegations of short payment of tax on outward supplies and excess availment of ITC. On Appeal, the Commissioner Appeals via Order-in-Appeal passed under Section 107 of the CGST/WBGST Act, the Appellate Authority directed them to appear before the Adjudicating Authority and produce documentary evidence for verification of admissible Input Tax Credit (ITC), despite recording findings favourable to them thereby remanding the matter. Aggrieved by the remand direction, the petitioners filed an application under Section 161 seeking rectification on the ground that Section 107(11) expressly prohibits the Appellate Authority from remanding a case to the Adjudicating Authority. The rectification application was rejected solely on the ground that it had been filed beyond the prescribed limitation period of six months, without examining the jurisdictional issue. Consequently, the petitioners approached the Calcutta High Court challenging both the remand direction contained in the appellate order and the subsequent order rejecting the rectification application.

Relevant Section

Section 107 of the CGST Act, 2017.
Section 161 of the CGST Act

Question before Hon’ble Court

Whether the Appellate Authority exercising powers under Section 107 can remand a matter to the Adjudicating Authority?

Brief Arguments by Petitioner

The petitioner submitted that Section 107(11) specifically empowers the Appellate Authority only to confirm, modify or annul the order appealed against and expressly prohibits the Appellate Authority from remanding the matter back.

It was argued that although the Appellate Authority accepted that admissible ITC could be allowed after verification, instead of modifying the demand it relegated the petitioner back to the adjudicating authority. Such remand was wholly without jurisdiction.

Brief Arguments by Respondent

The Revenue argued that since the petitioner had themselves filed a rectification application under Section 161 and the same was rejected on the grounds of limitation, the rectification order merged with the original appellate order. Accordingly, the petitioner should pursue the statutory appellate remedy against both orders instead of invoking writ jurisdiction. The Revenue submitted that interference with the Order-in-Appeal under Article 226 was therefore unwarranted.

Findings and Judgement

On reading of Section 107(11), the Court observed that the language of the provision is unequivocal. The Court held that the Appellate Authority while deciding an appeal can confirm the order; modify the order; or annul the order. It may conduct further inquiry wherever necessary; it cannot refer the case back to the adjudicating authority because the statute has expressly prohibited remand.
In the instant case, having already recorded findings favourable to the petitioner regarding reversal of excess ITC, it ought to have modified the demand instead of remitting the matter. Consequently, the direction of remand was a jurisdictional nullity.
The Court further held that rejection of the rectification application on limitation did not cure this defect. Jurisdictional errors remain open to judicial review notwithstanding the doctrine of merger or existence of an alternate remedy. Since the appellate authority had acted contrary to an express statutory prohibition, the writ petition was maintainable.
Accordingly, the Court directed the Appellate Authority to decide the appeal afresh on the basis of the findings already recorded and specifically directed that no remand be made to the Adjudicating Authority.

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GST update /2026-27/0053

GST UPDATE

Brief Facts of the Case

Relevant Section

Question before Hon’ble Court

Brief Arguments by Petitioner

Brief Arguments by Respondent

Findings and Judgement

Opinion

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