"Appeal or Ordeal?" - Why Section 107 of the CGST Act Should Not Be Dumped, But Definitely Must Be Rebuilt
In every tax system, there’s one simple truth: mistakes will happen-by taxpayers, by officers, by portals, by templates, and sometimes by sheer misunderstanding of facts. The real question is not whether errors will occur, but what the law offers as a pressure-release valve when they do.
Under GST, that valve is Section 107 of the CGST Act, 2017-the provision that gives a taxpayer the first statutory right to appeal before the Appellate Authority (commonly the Commissioner (Appeals) / Joint Commissioner (Appeals), depending on the State/Center setup). Many taxpayers today ask a frustrated question:
"Why should we continue Section 107 anymore?"
The frustration is understandable-because for many, the first appeal feels less like a remedy and more like a ritual. Yet, abolishing or weakening Section 107 would be like removing the seatbelt because traffic is bad. The problem isn’t the existence of the first appeal; the problem is how it operates.
So let’s answer the question honestly: Should Section 107 continue? Yes. Should it continue in its current avatar? Absolutely not.
1) What Section 107 is supposed to be (and what it often becomes)
Section 107 is the taxpayer’s gateway to challenge:
wrongful tax demands,
ITC denials,
classification disputes,
valuation additions,
penalty orders,
refund rejections,
registration cancellations,
and countless "copy-paste" adjudication outcomes.
In theory, it is meant to be:
a speedy correction mechanism,
a fact-finding stage, and
a filter that reduces unnecessary High Court writs.
But in practice, it sometimes becomes:
a delay chamber,
a pre-deposit toll booth, and
a battlefield where technicalities overpower merits.
If that’s your lived reality, your anger is justified. But here’s the twist: the answer is not to discontinue Section 107-because without it, you’re pushed into far worse options.
2) If you weaken Section 107, the system collapses into writ chaos
A common suggestion is: "Let taxpayers go directly to High Courts." That sounds powerful-until you see the consequences:
High
Courts are not designed for routine fact disputes.
They intervene mainly on
jurisdictional errors, violation of natural justice, and perversity-not to re-check every
invoice trail, stock register, e-way bill chain, or reconciliation.
Litigation cost explodes.
First appeal is still comparatively accessible. If
Section 107 is diluted, taxpayers-especially SMEs-will be priced out of
justice.
The
judiciary gets flooded.
The first appeal tier is a necessary sponge. Remove
it, and writ petitions become the new "normal appeal." That’s not good for
taxpayers or the system.
So even if Section 107 feels painful, its absence would be catastrophic. The correct approach is: fix the first appeal, don’t kill it.
3) Section 107 is the "due process" bridge between departmental power and taxpayer rights
GST officers have enormous powers-inspection, seizure, detention, best judgment assessment, and penalties. In such a landscape, Section 107 performs a constitutional-flavoured role (even though appeal is statutory):
It disciplines adjudication, because orders know they will be reviewed.
It reinforces fairness and consistency, especially when field formations take aggressive stands.
It protects the taxpayer from becoming a helpless spectator to "demand by default."
In plain language: Section 107 is what keeps GST from becoming a one-way street.
4) Then why are taxpayers fed up? Because the "appeal experience" is broken
Let’s call out the real pain points that make people ask, "why continue this anymore?"
Section 107 typically requires payment of:
the admitted amount, plus
a fixed percentage of the disputed tax (commonly 10%) to maintain the appeal, and on that deposit, recovery is generally stayed to that extent.
For large businesses, it’s manageable. For small taxpayers, it can feel like:
"I’m punished first, heard later."
A remedy should not look like a premium subscription: "pay to unlock justice."
Taxpayers miss deadlines due to:
portal glitches,
delayed uploads,
non-service/incorrect service,
illness, family emergency,
or late professional advice.
When the condonation window is tight, genuine cases die at the gate-not because the taxpayer is wrong, but because time ran out.
Nothing frustrates a taxpayer more than:
non-consideration of evidence,
summary rejections,
copy-paste reasoning,
and "speaking orders" that speak everything except the point.
When the appeal order looks like a formality, Section 107 begins to feel like a cruel joke.
Even a strong case becomes meaningless if:
appeal hearings are given after months,
orders are reserved indefinitely,
recovery pressure continues indirectly,
working capital remains locked.
Justice delayed is not just justice denied-in tax, it is often business destroyed.
5) Why Section 107 must continue: because GST still needs a real first appellate fact forum
There are only two places where facts can be properly tested:
1. adjudication, and
2. first appeal.
Beyond that, the system tends to narrow into legal questions, procedural review, or higher-level scrutiny. If the first appeal is weakened, then:
wrong facts become "final facts,"
errors become "permanent demands," and
taxpayers are forced to fight uphill forever.
A good first appeal stage is what ensures:
wrong notices don’t mature into wrong recoveries,
genuine ITC isn’t lost due to supplier-side drama,
classification disputes are resolved consistently,
and refund denials get real review.
Section 107 is not optional infrastructure.
It is the foundation of GST dispute resolution.
6) The real reform agenda: Keep Section 107, but make it worthy of trust
If we want taxpayers to stop asking "why continue Section 107 anymore?", the law and administration must make the first appeal credible, quick, and fair. Here are reforms that would transform Section 107 from "ordeal" back to "appeal":
First appellate authorities should be structurally insulated from the executive chain. The perception of departmental bias is a silent poison. Independence creates confidence.
Genuine delays should not be punished with permanent loss of remedy. A broader, principled discretion reduces injustice.
A first appeal should not take eternity. Statutory timelines, performance tracking, and reasons for delay should be institutionalised.
Consider:
graded pre-deposit based on turnover,
caps for small taxpayers,
or hardship-based relaxation with safeguards.
Justice should not bankrupt the seeker.
Appeal orders must address:
each major ground,
each key document,
and the taxpayer’s central arguments.
If the order doesn’t engage with the dispute, it is not adjudication-it is paperwork.
GST disputes are document-heavy. A meaningful opportunity of hearing-physical or virtual-must be the norm, not charity.
Conclusion: Section 107 is not the villain-poor implementation is
If Section 107 were removed or diluted, taxpayers would not become freer. They would become more dependent on writ courts, more exposed to recovery pressure, and more vulnerable to factual errors turning into irreversible liabilities.
So the better question is not:
"Why continue Section 107 anymore?"
The better question is:
"How do we make Section 107 work like an appeal, not a punishment?"
Because GST doesn’t just need revenue collection. It needs rule of law.
And Section 107-properly reformed-is the first checkpoint where rule of law is supposed to win.
Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.