Unreasoned Appellate Order Echoing Adjudication Without Application of Mind is Invalid

Issue

Whether an order passed by the Appellate Authority under Section 107 of the CGST Act is legally sustainable if it merely confirms the Adjudicating Authority’s order via a brief conclusion without recording specific reasons, dealing with the grounds of appeal, or analyzing the evidence (such as the claim of “Pure Agent” status based on CBIC Circular No. 57/31/2018-GST).

Facts

Period: 1 April 2019 to 31 March 2020.
The Dispute: The petitioner faced an adjudication proceeding under Section 74 (Determination of tax not paid due to fraud/suppression). The Adjudicating Authority confirmed a demand for tax, interest, and penalty (Form DRC-07), rejecting the petitioner’s defense.
Petitioner’s Defense: The petitioner argued they were acting merely as “Agents” and not as “Suppliers” on their own account. To support this, they relied on CBIC Circular No. 57/31/2018-GST, which clarifies the scope of the Principal-Agent relationship (Schedule I). They had submitted a letter enclosing relevant documents to prove this status.
Adjudication Flaw: The Adjudicating Authority noted the letter but imposed liability under Section 74(9) primarily on the technical ground that the documents were not uploaded on the GST portal, ignoring the physical submission.
Appellate Order: The petitioner appealed under Section 107. The Appellate Authority dismissed the appeal via a two-page order. Crucially, the order devoted almost all its space to reciting facts and history, followed by a brief, unreasoned conclusion rejecting the appeal.

Decision

The Calcutta High Court (implied by WBGST Act context) ruled in favour of the assessee and set aside the appellate order.
Order is a Nullity: The Court held that the appellate order was a “nullity in law” because it failed to provide reasons for its conclusion. Recording reasons is the “heart and soul” of any quasi-judicial order.
Violation of Mandate: The order violated the statutory mandate (typically Section 107(12) of the CGST Act, which requires the appellate order to state the points for determination, the decision thereon, and the reasons for the decision).
Non-Application of Mind: By merely “echoing” the adjudication order without independently dealing with the specific ground (Agent status per Circular 57) or the documents submitted, the Appellate Authority failed to apply its mind.
Remand: The matter was remanded to the Appellate Authority for fresh consideration. The Authority was directed to pass a speaking order dealing with the petitioner’s specific defense regarding the Circular and the documents.

Key Takeaways

Speaking Orders Mandatory: An Appellate Authority cannot simply say “Appeal Dismissed.” It must explain why the appellant’s arguments (e.g., regarding Circular 57) are incorrect. An order consisting only of a recital of facts and a conclusion is liable to be quashed under Article 226.
Circular 57/31/2018-GST: This circular is a critical defense for intermediaries. It distinguishes between an agent who “supplies goods on behalf of the principal” (liable to GST) and one who does not (not liable). Ignoring this circular when raised constitutes a legal error.
Physical vs. Digital Evidence: Rejection of a defense solely because documents were physically submitted but not “uploaded on the portal” is a procedural hyper-technicality that courts often frown upon, especially when the officer acknowledges receipt of the physical letter.

HIGH COURT OF CALCUTTA

Indrani Dhar

State of West Bengal^*

Om Narayan Rai, J.

WPA No. 20674 of 2025

NOVEMBER 11, 2025

Anup Dasgupta and B. Sengupta for the Petitioner. N. Chatterjee, Tanoy Chakraborty and Saptak Sanyal for the Respondent.

ORDER

1. This writ petition assails an order dated June 26, 2025 passed by the appellate authority under Section 107 of the WBGST Act, 2017 whereby the petitioners’ appeal against the order dated May 22, 2024 passed under Section 74(9) of the said Act of 2017 has been dismissed.

2. Mr. Dasgupta, learned advocate appearing for the petitioners submits that the adjudication order passed under Section 74 of the said Act, 2017 could not have been passed against the petitioners inasmuch as the petitioners were not suppliers and that being so incidence of tax could not have been on the petitioners. In support of such submission, the petitioners rely on a circular bearing No.57/31/2018-GST dated September 4, 2018 issued by the Central Board of Indirect Taxes and Customs.

3. Attention of this Court is also drawn to page no.3 of the adjudication order where a letter dated February 24, 2021 written by the petitioner no.1 to the Assistant Commissioner of State Tax has been noticed. Taking this Court through the said letter it is submitted that under the cover of the said letter various documents as mentioned therein were brought on record to buttress, the petitioners’ contention that the petitioners were merely the agents of the supplier and not the supplier itself. It is submitted that despite those documents having been bought on record, the adjudicating authority proceeded to pass the adjudication order imposing tax on the petitioners, which the petitioners were never liable to pay.

4. Mr. Chakraborty, learned advocate appearing for the respondents submits that although the said letter has been taken note of by the adjudication authority, it will appear from the observations made by the adjudicating authority at page 4 of the order that the documents mentioned in the said letter were never uploaded on the relevant portal of the GST authorities.

5. In response to such submission, Mr. Dasgupta, learned advocate appearing for the petitioners submits that the said documents were, however, subsequently resubmitted before the adjudicating authority and the adjudicating authority should have, therefore, taken the same into consideration, as the same had important bearing on the petitioners’ case.

6. Heard the learned Advocates for the respective parties and considered the material on record.

7. The appellate order, which spreads over two pages provides no reason to support the ultimate conclusion that the appellate authority has reached. The first page and more than a half of the second page of the two pages order have been devoted to note a brief history of the case, statement of facts, grounds of appeal and the prayer. The only paragraph that has been written by the appellate authority in support of his conclusion falls short of even a modicum of reasoning. The same is extracted hereinbelow: –

” Observation of the Appellate Authority: Gone through the statement of facts and grounds of appeal, and the order passed by the Ld. Assistant Commissioner State Tax, Ballygunge charge vide order no.ZDI905240367165 dt. 22.05.24 for the period from 01.04.2019 to 31.03.2020 amounting to Rs.2592206.00 (CGST Rs.458859.00, CGST interest Rs.378385.00 CGST Penalty Rs.458859.00 SGST Rs.458859.00, SGST Interest Rs.378385.00, SGST Penalty Rs.458859.00) inform DRC 07 u/s 74 of WBGST Act 2017 and CGST Act 2017, read with rule 142(5) of WBGST Rule 2017, has also been examined. At the time of hearing Mr. Aloke Kumar Ghosh (Adv) submits documents in support of his claims made in the grounds of appeal which was also submitted by the appellant at the time of adjudication also and after examination of all the documents submitted by the appellant as well as the order passed by the proper officer, I find no reason to interfere into the order passed by the proper officer as he has passed the order properly as he has passed the order properly as per the provision of law under the WBGST Act 2017 read with corresponding WBGST Rules 2017.

Hence the order of the Proper Officer is confirmed and the appeal petition filed by the petitioner is rejected. The appeal petition is thus disposed of.”

8. Section 74(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.

12. Urgent certified photocopy of this order, if applied for, be supplied as expeditiously as possible.