Appellate Authority empowered to re-adjudicate refund claims taking into considerations new documentary evidence, facts and law

The Hon’ble Delhi High Court in the case of Chegg India Private Limited Versus Assistant Commissioner CGST Mohan Cooperative Industrial Estate (Mcie) & Ors. - 2025 (9) TMI 1208 - DELHI HIGH COURTheld that the Appellate Authority is empowered under Section 107(11) of the CGST Act to comprehensively re-adjudicate refund claims, including considering fresh documents and all periods together, and must avoid the inconsistencies caused by staggered, piecemeal adjudication.

Facts:

Chegg India Private Limited ('the Petitioner') is an education technology company that exports software, content, and IT/ITES services to its US-based parent and sought refunds of unutilized Input Tax Credit (ITC) for various tax periods. Multiple Orders-in-Original partly or fully rejected refund claims on grounds such as insufficient documentary evidence and the Petitioner not undertaking 'export of service.'

The Assistant Commissioner CGST ('the Respondent') in various orders held the Petitioner to be an 'intermediary' or otherwise failed to find the services as eligible 'export of services,' resulting in denial of significant ITC refunds. Rejections alternated with partial grants in different periods, creating contradictions.

The Petitioner contended that the nature of services and documents across all refund claims was essentially identical, yet the authorities had taken inconsistent and irreconcilable stands, leading to unfair denial of refunds. The Petitioner asserted all relevant documents had been submitted and further documentary proof was filed at the appellate stage.

The Respondent contended that the Appellate Authority lacked power at the appeal stage to entertain fresh documents or conduct de novo factual re-determination, arguing that only the original authority could make factual findings.

Aggrieved by inconsistent and partial orders, the Petitioner approached the Delhi High Court under Article 226, seeking a consolidated, just determination of ITC refund claims and full exercise of appellate powers.

Issue:

Whether the Appellate Authority under Section 107(11) of the CGST Act can fully re-adjudicate the refund claim, consider new evidence, and must avoid rendering inconsistent orders through staggered, piecemeal consideration of refund applications for the same set of services?

Held:

The Hon’ble Delhi High Court in Chegg India Private Limited Versus Assistant Commissioner CGST Mohan Cooperative Industrial Estate (Mcie) & Ors. - 2025 (9) TMI 1208 - DELHI HIGH COURT held as under:

• Observed that, Section 107(11) of the CGST Act endows the Appellate Authority with complete powers to confirm, modify, or annul the order appealed against, implying a full-fledged first appellate jurisdiction.
• Noted that, the embargo on remand does not restrict the Appellate Authority from comprehensively re-examining both evidence and law on record, including documents submitted at the appeal stage.
• Observed that, staggered and piecemeal adjudication led to contradictory and irreconcilable results, which must be avoided; all refund applications, given their commonality, should be adjudicated together.
• Set aside all impugned Orders-in-Appeal and remanded matters to the Appellate Authority for a comprehensive, coordinated decision on all refund claims after granting personal hearing and opportunity to submit additional documents.

Our Comments:

This judgment clarifies the powers under Section 107(11) of the CGST Act, holding that appeals are by nature re-hearings on both facts and law, permitting complete examination of material and rectification of any error or omission below. The reliance on Sonu Monu Telecom Pvt. Ltd. Through Its Director Jitender Garg & Anr. Versus The Union Of India Revenue Secretary, Ministry Of Finance, & Anr. - 2025 (7) TMI 1395 - DELHI HIGH COURT is apt, wherein it was held that confirmation, modification, or annulment of decisions at appellate stage is a plenary power of the Appellate authority.

Relevant Provision:

Section 107(11) of CGST Act, 2017:

“107. Appeals to Appellate Authority-

(11) 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:

Provided that 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:

Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74 or section 74A.”

 (Author can be reached at [email protected])