Section 107(11): No Remand, and the Two Provisos

Section 107 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The Appellate Authority has three options and not a fourth. That structural choice shapes how a first appeal has to be run.

Section 107(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 it. First proviso: an order enhancing any fee, penalty or fine in lieu of confiscation, 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. Second proviso: where the Appellate Authority is of the opinion that tax has not been paid, short paid or erroneously refunded, or credit wrongly availed or utilised, no order requiring the appellant to pay shall be passed unless the appellant is given notice to show cause and the order is passed within the time limit specified under s.73, s.74 or s.74A.

Why "no remand" matters

Compare s.113(1), which allows the Appellate Tribunal to confirm, modify or annul or refer the case back to the Appellate Authority, the Revisional Authority or the original adjudicating authority for a fresh adjudication after taking additional evidence.

The first Appellate Authority has no such power. It must decide.

Three consequences for the appellant:

The record must be complete at the first appeal. There is no second bite before the adjudicating authority. Everything relied on must be before the Appellate Authority — subject to Rule 112 on additional evidence. Rule 112 →

A defective order below cannot simply be sent back. Where the adjudication order is non-speaking, or was passed without a hearing, the Appellate Authority cannot cure it by remitting. It must decide the matter itself, which means the appellant must argue the merits fully as well as taking the procedural point.

"Such further inquiry as may be necessary" is the counterweight. The Appellate Authority may itself make further inquiry — call for records, seek a report — rather than remanding. Where a factual gap exists, asking the Appellate Authority to make that inquiry is the available route.

The first proviso: enhancement needs a show cause

The Appellate Authority may enhance — but only after notice.

What the proviso covers:

• enhancing any fee;
• enhancing any penalty;
• enhancing any fine in lieu of confiscation;
• confiscating goods of greater value;
• reducing the amount of refund;
• reducing the amount of input tax credit.

What it requires: a reasonable opportunity of showing cause against the proposed order — so the appellant must be told what enhancement is proposed and why, and be heard on it.

Where this bites in practice. An appeal against a refund rejection can result in a larger reduction than the order below made. An appeal against a penalty can result in a higher penalty. The proviso is the protection, and it means an appellant must watch for any indication that enhancement is being considered and insist on notice.

It is a real risk of appealing. Before filing, the question "can this get worse?" should be asked and answered — and the answer under the first proviso is yes, on those six heads, though only after notice.

The second proviso: a fresh tax demand needs a notice and is time-barred

This is the more significant of the two.

Where the Appellate Authority is of the opinion that tax has not been paid or short paid or erroneously refunded, or credit has been wrongly availed or utilised, an order requiring the appellant to pay it requires:

• a notice to show cause against the proposed order; and
• the order to be passed within the time limit specified under s.73, s.74 or s.74A.

Both conditions. So the Appellate Authority cannot create a new tax demand in the appeal simply because it disagrees with the adjudicating authority's view of the facts. It must issue a notice, and it must act within the demand limitation for that period.

The limitation point is decisive in most cases. By the time a first appeal is heard — three months to file, up to a year to decide under s.107(13) — the limitation for the relevant year has often expired, particularly for the older years. Where it has, the second proviso prevents the fresh demand altogether. The demand limitation map →

The reference to "or section 74A" was inserted by the Finance (No. 2) Act, 2024, notified through Notification No. 17/2024-CT dated 27.09.2024, w.e.f. 01.11.2024, aligning the proviso with the unified demand provision for FY 2024-25 onwards.

The rest of the framework

Section 107(8) — an opportunity of being heard shall be given to the appellant.

Section 107(9) — adjournments on sufficient cause, for reasons recorded in writing, but not more than three times to a party.

Section 107(10) — an additional ground may be allowed if the omission from the grounds of appeal was not wilful or unreasonable. So a ground overlooked in drafting can be added at the hearing — but the burden is on the appellant to explain the omission, which is a good reason to draft the grounds comprehensively in the first place. Drafting the grounds →

Section 107(12) — the order shall state the points for determination, the decision thereon and the reasons. The same speaking-order requirement as s.75(6) at the adjudication stage.

Section 107(13) — decide within one year "where it is possible to do so", excluding any period of stay. Directory, not mandatory, and with no deeming consequence.

Section 107(14) and (15) — the order is communicated to the appellant, the respondent and the adjudicating authority, with a copy to the jurisdictional Commissioner and the Commissioner of State or Union territory tax.

Section 107(16) — final and binding, subject to s.108, s.113, s.117 and s.118.

Key takeaways

• The Appellate Authority may confirm, modify or annul — and cannot remand.
• "Such further inquiry as may be necessary" is the substitute for a remand; ask for it where a factual gap exists.
• The first proviso allows enhancement of fee, penalty or fine, greater confiscation, or reduction of refund or credit — only after a show cause.
• The second proviso bars a fresh tax demand without a notice and within the s.73 / 74 / 74A limitation.
• Section 107(10) permits an additional ground where the omission was not wilful or unreasonable.
• Three adjournments, and the order must state points, decision and reasons.

Read next

• Section 107: The First Appeal and the Pre-Deposit
• Rule 112: Additional Evidence Before the Appellate Authority
• Drafting the Grounds of Appeal in a GST Appeal
• Section 113: Orders of the Tribunal, and the Power to Remand

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition).