What are the grounds of appeal in GST?

Grounds of appeal in GST represent those issues that show the nature of the dispute between the assessee and the revenue. If an appellant feels aggrieved by any findings, observations, or conclusions made by the authority granting the order, they can consider initiating an appeal.

The government is gearing up to set up an online post-audit functionality. Considering an evolving law like GST, businesses are required to understand the nitty-gritty of Departmental Audits and Litigation under GST to ensure they are well-prepared to defend their cases.

What is GST Appeal?

Any legal appeal is an attempt to have the judgment of a lower court reconsidered in front of a higher court. When there are any legal difficulties or disputes, appeals are made. You can read our article on Legal Disputes and GST Appeals to know more.

The GST law provides for a two-tier appellate mechanism to resolve disputes and enforce compliance. The first tier of appeal is with the Adjudicating Authority, while the second tier of appeal is with the Appellate Authority.

In this article, we will explore the grounds of appeal under GST and the procedures involved in filing an appeal.

Grounds of Appeal under GST

The grounds of appeal under GST are as follows:

Unlawful Demand: A taxpayer may file an appeal if they believe that the demand for tax is unlawful or incorrect.
Penalties: Taxpayer may file an appeal if they believe that the penalty imposed on them is unjustified or incorrect.
Classification: A taxpayer may file an appeal if they believe that the classification of goods or services is incorrect.
Valuation: A taxpayer may file an appeal if they believe that the valuation of goods or services is incorrect.
Refunds: A taxpayer may file an appeal if they believe that the refund claimed by them has been wrongly rejected or delayed.

Important points to note before drafting grounds of GST Appeal

Before drafting the grounds of appeal, one must carry out an in-depth study of all the documents including but not limited to:

The GST Returns,
Copies of communications received from the proper officer timely
Copies of show cause notice (SCN),
Replies filed in response to the SCN,
Copies of proceedings/orders or decisions passed by the adjudicating authority,
Copy of the appellate order.

In order to prepare for drafting grounds of a GST appeal, having the documentation in place is extremely important.

How to draft grounds of appeal in GST

Grounds of appeal in GST represent those issues that show the nature of the dispute between the assessee and the revenue. A ground of appeal is in fact nature of a claim thus it is distinguished from arguments because arguments are made in support of the claim. There may be several arguments in support of a claim and all the arguments cannot form the ground of appeal.

Here are some tips to draft the grounds of appeal effectively:

Every memorandum of the GST appeal has to be written in English
Grounds of Appeal need to be crisp and concise
Each ground has to be given a distinct head
Grounds must not contain any arguments or narration of any event, even if such arguments/narratives are required to bring out the nature of the dispute
Grounds should be numbered consecutively

What are appealable orders?

Listed below are the orders against which the aggrieved person can file an appeal:

Enforcement Order
Assessment or Demand Order
Registration Order
Refund Order
Assessment Non-Demand Order
LUT Order

When can the appeal NOT be filed?

To control the appeals process and save needless legal costs, the Board or the State Government may, at the Council’s advice, set monetary limits for appeals by the GST officer.

An appeal cannot be made against every decision. The following decisions made by a GST officer cannot be appealed:

Order to transfer the proceedings from one officer to another officer;
Order to seize or retain books of account and other documents;
Order sanctioning prosecution under the Act; or
Order allowing payment of tax and other amounts in installments

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When litigations across multiple GSTINs in a legal entity or multiple entities in a group are handled, the following are the most common pain points of the Industry given the sensitivity attached to litigations:

To keep a track of all the actionable,
To monitor the preparedness & progress of the litigations on a regular basis
To have all the information/documents required for facing such litigations right from its source.

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Please feel free to revert with any queries regarding GST litigation and departmental audits. Our team of experts can certainly take on your specific questions, if any and look at resolving the issues efficiently. Email: support@irisgst.com.