TaxTMI 
TaxTMI 
28 Sep 2026 
If at all the first appellate authority is not following sub-section 12 of section 107 of CGST Act which reads as "The order of the appellate authority disposing the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decisions", then for whom that sun section is there?. This sub section is the most important one for the first appellate authority as it is on how the order is required to be passed. The High Court of Allahabad had an occasion on 21/09/2026 to examine a case in writ tax number 1417 of 2026 as reported in M/s Good Grain Foods Versus State of Uttar Pradesh And 2 Others - 2026 (9) TMI 1580 - ALLAHABAD HIGH COURT wherein the first appellate authority has failed to pass order in line with the above sub section. Let us move further to understand this case.
One show cause notice was issued on the taxpayer on 07/12/2024. The same was duly replied but the deputy commissioner confirmed huge penalty of Rs. 1.24 crore on 25/03/2025. Aggrieved, appeal was preferred before the first appellate authority. The facts of the case as well as grounds of appeal were on record. However, the learned additional commissioner, State Taxes, Grade 2 (Appeals) has rejected the appeal on the ground of lack of prosecution. The petitioner preferred a writ before the jurisdictional high court. It was argued by the counsel of petitioner that the OIA was passed in violation of section 107(12). Though the taxpayer was not present for personal hearing, the grounds of appeal were not considered before dismissal of the appeal. The high court has observed that
"11. When the appeal is dismissed for reason only in the absence of appeal or lack of effective prosecution then the Appellate Authority should be found to have abdicated its powers and not followed the statutory mandate.
12. Section 107 (12) of the Act mandates that reasons must be provided to support the ultimate decision. Even otherwise reasons have been held to be a live link between the narrative and the directive. Absence thereof can render an order of nullity".
Accordingly, the writ was disposed by the following order: 13. The impugned order shows that appellate authority has not applied its mind to the matter at all and has passed the impugned order without dealing with the facts of the case on merit. the writ
14. In view of the facts and circumstances of the case as narrated above, both petitions are allowed. The impugned order dated 15.11.2025 passed by the appellate authority in both the aforesaid writ petitions, are hereby quashed. The matter is remanded to the appellate authority, who shall pass a fresh reasoned and speaking order on the merit of the case, after giving opportunity of personal hearing to the parties concerned, in accordance with law.
This is not a single case from State of U P. A similar case from Calcutta High Court on similar circumstances is available in Indrani Dhar & Anr. Versus The State of West Bengal & Ors. - 2025 (12) TMI 80 - CALCUTTA HIGH COURT where the order reads as "8. 1[Section 107(12)] of the said Act of 2017 now mandates that reasons must be provided to support the ultimate decision. Even otherwise, reasons have been held to be the live link between the narrative and the directive. Absence thereof can render an order a nullity.
9. A perusal of the appellate order impugned herein reveals that the appellate authority has not applied his mind to the matter at all and has dittoed the order passed by the adjudicating authority without delving into the facts of the case before him. The statement of facts and the grounds of appeal presented by the petitioner before the appellate authority have been annexed at pages 150 to 159 of the writ petition. The same do not appear to have been considered by the appellate authority at all in reaching the conclusion that he has by the order impugned. The order impugned is wholly unreasoned and the same therefore cannot sustain scrutiny of this Court under Article 226 of the Constitution of India.
10. The order dated June 26, 2025 is set aside and the matter is remanded to the appellate authority for fresh consideration of the appeal, in accordance with law. It is clarified that this Court has not gone into the merits of the matter and all points will be left open to be decided by the appellate authority in accordance with law.
11. WPA 20674 of 2025 is disposed of. There shall, however, be no order as to costs.
As all officers of various State behave alike, it is seen from M/s. Suryalatha Spinning Mills Limited Versus Deputy Commissioner (ST) STU-2. - 2025 (2) TMI 1313 - TELANGANA HIGH COURT that section 107(12) violation was there. The operative portion of the order reads as "10. Since the impugned order of the Appellate Authority is sketchy and does not deal with the grounds of the appeal, the same is set aside. The matter is restored to its original file before the learned Appellate Authority. The petitioner shall appear before the learned Appellate Authority on 03.03.2025 at 11.30 AM. The learned Appellate Authority shall rehear the petitioner and pass a fresh order, in accordance with law".
Conclusion: The first appellate authority all over India must take utmost care in adherence of section 107(12) as GSTAT is fully functional now and orders have started to be available in portals of GSTAT. By simply rejecting an appeal, which is subsequently set aside and remanded to the same authority, it proves that there is an urgent need to pass orders in compliance with all sub sections of Section 107 by the first appellate authority.