Dismissal of GST Appeal for Default Is Impermissible and Order

Dismissal of GST Appeal for Default Is Impermissible and Order Must Be Decided on Merits by Speaking Order

Issue

Whether the First Appellate Authority can dismiss a GST appeal for non-appearance/default using a cryptic, non-speaking order, or if Section 107 requires the authority to decide the appeal on merits through a reasoned speaking order after considering adjournment requests?

Facts

Assessee Profile & Operations: The appellant is a life insurance company operating under a single PAN with 24 GST registrations across India, including Punjab.
Transactions & Allegations: The appellant raised invoices from its Punjab registration to its branches in other States, charging IGST and utilizing Input Tax Credit (ITC). The Department issued a Show Cause Notice (SCN) alleging paper invoicing without underlying services and proposing penalties.
Order-in-Original (OIO) & First Appeal: The Order-in-Original confirmed the penalty against the appellant, following which the appellant filed a first appeal under Section 107.
Appellate Proceedings: On the first hearing date, no appearance was made. On the subsequent date, the appellant submitted an application seeking an adjournment and a fresh hearing date.
Cryptic Dismissal: On the very same day, the Appellate Authority rejected the adjournment request, dismissed the appeal for non-appearance, and passed a brief, cryptic order stating that grounds were perused and the OIO required no interference.

Decision

Violation of Section 107(11) (No Dismissal for Default): Under Section 107(11), a First Appellate Authority has no power to dismiss a statutory GST appeal for default or non-appearance. In the absence of a party, the authority may at most proceed ex parte, but must still decide the matter on its merits.
Non-Compliance with Section 107(12) (Mandatory Speaking Order): Section 107(12) mandates a reasoned order setting out the specific points for determination and grounds for decision. A bare statement affirming the OIO without detailed reasoning fails to satisfy statutory requirements.
Breach of Natural Justice: Rejection of the adjournment request without due consideration and rendering a cryptic dismissal breached the principles of natural justice (audi alteram partem).
Remand for Fresh Adjudication: The Order-in-Appeal was set aside, and the matter was remitted back to the First Appellate Authority for a fresh decision on merits via a detailed speaking order after affording a fair opportunity of hearing.

Key Takeaways

Prohibition of Dismissal for Default: Appellate Authorities under Section 107 of the CGST/SGST Act cannot dismiss appeals merely due to non-appearance; they are legally obligated to adjudicate the appeal on merits.
Mandate for Reasoned Speaking Orders: Statutory appellate orders must explicitly outline points for determination, analyze arguments, and provide clear legal reasoning under Section 107(12).
Right to Opportunity of Hearing: Arbitrarily ignoring adjournment applications and issuing same-day summary dismissal orders violates principles of natural justice and renders the resulting order legally unsustainable.

GOODS AND SERVICE TAX APPELLATE TRIBUNAL ,JALANDHAR BENCH

Exide Life Insurance Company Ltd.

Anurag Bharti^*

Suman Jain, Vice President
and Harpinder Pal Singh Ghotra, Technical Member

APL No. 94 (JLN) OF 2026

SEPTEMBER 29, 2026

S.S. Gupta and Archit Aggarwal, Chartered Accountant for the Appellant. Ms. Daisy Guleria, STO for the Respondent.

ORDER

1. The appellant has preferred the present appeal against the Order-in-Original dated 29.04.2024 passed by the State Tax Officer, Ludhiana-3, whereby a penalty of Rs. 1,24,10,337 was confirmed against it, and the Order-in-Appeal dated 22.12.2025 passed by the Deputy Commissioner of State Tax (Appeals), Ludhiana, whereby the appeal of the appellant was dismissed and the Order-in-Original was upheld.

2. The brief facts of the case are that the appellant is a life insurance company. It has one PAN and 24 GST registrations in the country, including one in Punjab. For June 2020, from its Punjab registration, it raised invoices on its own branches in other States. On these invoices it showed outward supplies of Rs. 6,89,46,317 and charged IGST of Rs. 1,24,10,337, which it paid by using the credit lying in its Punjab account. On investigation, the Department found no proof that any service actually went from Punjab to the branches. The department took the view that these were only paper invoices, with no real supply behind them, raised just to pass on the ITC accumulated over the years in Punjab Branch ITC ledger account and to utilize the accumulated ITC to full extent. On this basis the department issued a show cause notice on 08.01.2024 and proposed a penalty of Rs. 1,24,10,337 under Section 122(l)(ii) and Section 122(l)(xvii) of the Act.

3. The appellant filed a reply dated 22.02.2024 on the common portal against the said Show Cause Notice and also attended the personal hearing before the adjudicating authority on 14.03.2024. The adjudicating authority passed the Order-in-Original vide Order dated 29.04.2024 and confirmed the full penalty of Rs. 1,24,10,337. The appellant then filed a first appeal on 26.07.2024 before the Deputy Commissioner of State Tax (Appeals), Ludhiana. The appeal was first fixed for hearing on 13.10.2025, but no one appeared from the appellant side before the Adjudicating Authority. The appellant was given one more opportunity for personal hearing on 17.11.2025. On that date the appellant had sought an adjournment and had also asked for a fresh date, as is clear from the adjournment request on record (Annexure 5 of Paper book). But without considering this request, the Appellate Authority dismissed the appeal by the Order-in-Appeal dated 22.12.2025 and upheld the Order-in-Original.

4. In view of the above, the law point which arises in the present case is “Whether the Order-in-Appeal, having been passed without affording an opportunity of hearing and without deciding by a speaking order, is sustainable under Section 107 of the Act and the principles of natural justice?”

5. Learned authorised representative, Shri Archit Aggarwal for the appellant argues that the impugned order is against the principles of natural justice. He submits that the appellant had asked for an adjournment of the hearing fixed for 17.11.2025 and also for a fresh date, but this request was not considered, and the appeal was dismissed the same day. The appellant was thus not heard at all. He further submits that the order is a one-page order which decides no ground and gives no reasons, and that an appeal cannot be dismissed only because the appellant is absent and that it has to be decided on merits by passing a speaking order in terms of Section 107 of the Act.

6. Learned representative for the respondent-Department submits that the appellant was given a fair chance of hearing, first on 13.10.2025 and again on 17.11.2025, but did not appear on either date. He submits that the Appellate Authority heard the departmental representative, went through the grounds of appeal, and found no reason to interfere with the order of the proper officer. He, therefore, submits that there is no breach of natural justice and the order needs no interference.

7. We have heard both sides at length and gone through the impugned order and the record. Section 107 of the Punjab Goods and Services Tax Act, 2017 deals with appeals before the First Appellate Authority. The section is reproduced below:

(1) Any person aggrieved by any decision or order passed under this Act or the Central Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.

(2) The Commissioner may, on his own motion, or upon request from the Commissioner of central tax, call for and examine the record of any proceeding in which an adjudicating authority has passed any decision or order under this Act or the Central Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order.

(3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application.

(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month.

(5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed.

(6) No appeal shall be filed under sub-section (1), unless the appellant has paid-

(a)

in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b)

a sum equal to ten per cent of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed.

(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed.

(8) The Appellate Authority shall give an opportunity to the appellant of being heard.

(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing:

Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.

(10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable.

(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.

(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.

(13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed:

Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.

(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority.

(15) A copy of the order passed by the Appellate Authority shall also be sent to the Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of central tax or an authority designated by him in this behalf.

(16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties.

8. A bare reading of the impugned order shows that the same is in teeth of section 107. As per sub-section (8), the Appellate Authority must give the appellant a hearing. Here, the appellant had asked for an adjournment and a fresh date, but this was not considered, and the appeal was dismissed the same day. As per sub-section (12), the order must be in writing and must state the points for determination and the reasons . thereof. A perusal of impugned order reads that the grounds were “perused” and that the order of the proper officer “requires no interference”. That is not the requirement of Section 107(12). Further, as per sub-section (11), the Appellate Authority has to make the needed inquiry and then confirm, modify or annul the order. The tone and tenor of section 107 apparently postulates that the appeal cannot be dismissed on account of non-appearance of appellant or his authorised representative. At most the appellate authority can proceed ex parte, but in that eventuality, it still is obligated to decide the appeal on merits. In the present case appeal was dismissed by a cryptic and non-speaking order and in complete defiance to section 107 of the act. Needless to say, the impugned order is hit by the principal of audi altrem partem. Hon’ble Punjab and Haryana High Court in Hudson Insurance Brokers (P.) Ltd. v. Union Territory of Chandigarh [2026] (Punjab & Haryana)/[2026] 108 GSTL 203 (Punjab & Haryana)/[2026] 115 GST 420 (Punjab & Haryana)/(2026) 41 Centax 304 (P&H), decided on 17.04.2026. In para 8 of the said judgment, it has been held as under:

9. Therefore, it has to be seen whether in passing the impugned order dated 24.12.2025 (Annexure P-1) respondents have failed to adhere to principle of natural justice or not. Perusal of the impugned order (Annexure P-1) goes to show that petitioner had duly submitted its reply along with relevant/requisite documents on GST portal on 26.11.2025. This fact stands acknowledged not only by acknowledgment slip annexed with the petition by the petitioner, but also by acknowledgment by authorities in para-No.5 of the impugned order. However, perusal of order goes to show that no reasons for not finding reply and documents annexed with reply uploaded on portal to be satisfactory have been given. The satisfaction recorded by authority that “taxpayer has not furnished any documentary evidence, records or supporting material to substantiate the statement made in the reply” has not been supported by any reasoning. No contention raised by petitioner or documents attached with reply dated 26.11.2025 has been noted, referred to or dealt with. The satisfaction so recorded by authorities below was required to be based upon reasoning which ought to have been reflected by way of impugned order. An order passed without any reasoning cannot be justified and can only be held to be a non-speaking order and violative of principles of natural justice. Authorities exercising quasi-judicial or judicial powers are bound to consider reply so preferred by assessee and are bound to give reasons for not agreeing to the contentions raised in the reply. An order without reasoning cannot be sustained and amounts to violation of principles of natural justice.

10. The Hon’ble Supreme Court in Balaji Steel Re-rolling Mills v. CCE & Customs 49 GST 1 (SC), held that the appellate forum has no power to dismiss an appeal for want of prosecution, and must decide the appeal on merits even if the appellant or his authorised representative is not present when the appeal is called. The Hon’ble Patna High Court in the case of Purushottam Stores v. State of Bihar (Patna)/[2023] 98 GST 640 (Patna)/[2023] 75 GSTL 276 (Patna)while dealing with section 107 of the Act and on placing reliance on Balaji Steel supra., wherein it was held, in para 7, that confirming, modifying or annulling an order under sub-section (11) cannot be an empty or mechanical formality, and must be done after looking at the grounds of appeal. It was further held that even if an adjournment is refused, the Appellate Authority cannot escape its duty to make the needed inquiry and to decide the appeal on merits, and that if an appeal is dismissed only for want of prosecution, the authority is taken to have given up its powers and gone against the law.

11. Even the Hon’ble Punjab and Haryana High Court in Krishna Maruti Limited, In re [CWP No. 47 of 2025 (O&M), dated 25.09.2025], held that Section 107(11) is similar to Section 35-C of the Central Excise Act, 1944, which governs the CESTAT, and that the Appellate Authority has no power to dismiss an appeal for default or non-prosecution. At most it can proceed ex parte, but it must still decide the appeal on merits.

12. In these circumstances, the impugned Order-in-Appeal dated 22.12.2025 passed by the Deputy Commissioner of State Tax (Appeals), Ludhiana, is set aside. The matter is remanded back to the First Appellate Authority to decide the appeal afresh on merits, by a speaking order, in accordance with law, after giving the appellant a hearing. The Appellate Authority shall decide the appeal as early as possible and preferably within six months. It is made clear that we have not said anything on the merits of the case, which are left open to be decided by the First Appellate Authority.

13. The appeal stands disposed of.