Section 107 of the CGST Act, 2017 must be applied appropriately.

The legislature has beautifully drafted the provisions contained in section 107 based on the past experience on the requirement for the first appeal as available in Income tax act, Customs Act etc. The adjudication officer often forgets the fact that he is a quasi- judicial officer due to work pressure as well as pressure from senior officers on revenue which is understandable. However, the officers at the level of first appellate authority must always act only as a Quasi-Judicial officer and pass appropriate orders only after carefully examining the facts of the case along with the legal provisions. This only shall solve the purpose of the section 107 as otherwise there would be no need for section 107.

As GSTAT is already in place and appeals before GSTAT are being filed electronically now, there is an urgent need for passing appropriate orders by all the first appellate authorities under GST law all over India to ensure the cases reaching GSTAT are UNAVOIDABLE.

The fact that 1885 appeals have already been filed out of which 133 pertains to last three days reveals that appellate authorities at first level are not passing reasoned orders. A rough estimate predicts the possible number of appeals likely to come up before GSTAT for the period from 01/07/2017 till 30/06/2026 as more than four lakhs. The first appellate authorities are expected to reduce the number of appeals before GSTAT and in case the first appellate authority pass unbiased orders, things could be managed as GSTAT is already having backlog of eight years.

This being so, one of the first appellate authority confirmed the adjudication order without application of mind as well as independent examination of the submissions of the taxpayer. The observations of the Calcutta High Court are disheartening to note which is reproduced below:

'As no further explanation and supporting documents have been furnished by the appellant at appeal stage, the findings of the adjudication officer stands valid and there is no reason to interfere his order'

The high court of Calcutta in WPA 24054 of 2025 on 23/02/2026 in the matter of Fratelli Vineyards Limited and another Vs State of West Bengal & Others - 2026 (2) TMI 1329 - CALCUTTA HIGH COURT observed the lapses of the first appellate authority and has set aside the order dated 17/06/2025 and remanded the matter for fresh consideration after examination of all available records.

In the instant case, all the required documents were already submitted before the adjudicating authority and order was passed under section 73 confirming demand. As the required information is already furnished, the taxpayer reiterated his earlier submissions. Only because the taxpayer has not furnished one more set again, the adjudication order was confirmed under section 107 also stating that no fresh explanations or documents have been submitted. Even in case the taxpayer has submitted additional set of the documents, the first appellate authority would have taken the stand that these documents were examined and found not satisfactory by adjudication officer and hence no further interference is needed. Thus, the first appellate authority confirmed the earlier order based on mindset and not on submissions of the taxpayer.

The High court has made very valid as well as vital observations in para 11 as below:

'11. The appellate order impugned does not show any application of independent mind by the appellate authority. The appellate authority has paraphrased the observations of the adjudicating authority and has clearly glossed over the explanations given by the petitioner against the observations made by the adjudicating authority in the appeal before the appellate authority. Non-application of mind by the appellate authority is also evident from the repeated use of the same expression (which has already been extracted hereinabove) at the end of every conclusion that the appellate authority has reached in respect of every ground for demand of tax'.

Having received such adverse comments from the jurisdictional high court, this first appellate authority is expected to be more cautious in future as in case he continues to pass orders confirming the order of proper officer passed under section 73 or 74, without any detailed examination as well as comments on his observations, it is easy for the taxpayer as well as tax professional to approach the High Court with a request to pass strictures as well as to impose cost as it tantamount to contempt of court.

Hence, let us hope that when GSTAT is operational all over India, the first appellate authority start passing reasoned orders based on the merits of the case in the days to come.