Can the appellate authority increase tax liability beyond the disputed amount

[vaibhav agrawal]

An appeal has been filed by the department under section 107(2) of the CGST Act. In Form APL-03, the disputed amount was mentioned as INR 1,68,073, but in the order issued by the appellate authority, the total tax liability has been finalized at INR 2,83,866.

The OIO covers the tax periods for FY 2017-18 and FY 2019-20, wherein the tax liability of INR 1,68,073 pertains to FY 2017-18 and INR 1,60,326 pertains to FY 2019-20. The assessing officer had earlier withdrawn the liability and issued a nil order. This was challenged by the department, and an appeal was filed.

In the appeal application, only the tax pertaining to FY 2017-18 was shown as the disputed amount, but the appellate order has included both FY 2017-18 and FY 2019-20.

My query is: Can the amount under dispute in the appeal application be less than the amount determined in the appellate authority’s order, in cases where the appeal has been filed under section 107(2) of the CGST Act?

AI Summary

Appellate authority must not expand tax liability beyond limits of department's appeal under Section 107(2) without fresh notice Where the department's appeal under section 107(2) specified a particular disputed amount or period, the appellate authority ordinarily should not expand liability beyond the scope of that appeal without giving the taxpayer proper notice and opportunity to contest the additional period or amount. Increasing tax to include another fiscal year not pleaded in the appeal - unless that year was part of the original adjudication order or the appeal expressly challenged it - risks exceeding the appellate mandate and violating principles of fair hearing; the affected party may challenge the excess portion of the order by filing rectification/appeal or seeking appropriate remedies.