GSTAT Office Order on Categorisation of Appeals: Category I, II and III Matters Explained
The Goods and Services Tax Appellate Tribunal has issued an important Office Order providing clarity on the manner in which GSTAT appeals shall be listed before the Benches. The order deals with the formation of Benches, listing of matters before Division Bench or Single Bench, and categorisation of appeals into Category I, Category II and Category III.
This categorisation is important for taxpayers, tax professionals, advocates and departmental officers, as it gives a broad idea of how different types of GST disputes may be placed before the Tribunal.
Background of the Order
As per Section 109(8) of the CGST Act, 2017 read with Rule 110A(1) of the CGST Rules, 2017, certain matters involving tax liability or other issues of a value less than Rs.50 lakhs, and which do not involve any question of law, may be heard by a Single Bench, subject to the approval of the President.
Further, under Rule 110A(2), if the Single Bench finds that the matter involves a question of law, the matter may be sent back to the Division Bench after approval of the President or Vice-President, as the case may be.
However, considering the practical difficulties in formation of Benches, the President of GSTAT has exercised powers under Rule 123 of the Goods and Services Tax Appellate Tribunal (Procedure) Rules, 2025, which allows passing of appropriate orders for removal of difficulties.
Accordingly, it has been directed that all pending matters and future filings before the Principal Bench or State Benches shall first be listed before a Division Bench.
Only where the Division Bench comes to the finding that the case does not involve any question of law, it may record reasons and place the matter before the President or Vice-President for appropriate directions.
Key Direction: Division Bench First
The most important takeaway from this Office Order is that all matters, whether pending or newly filed, shall first be listed before a Division Bench.
This means that even if a matter appears to be below Rs.50 lakhs and may not involve a question of law, it will not automatically go before a Single Bench. The Division Bench will first examine the nature of the matter. If it finds that no question of law is involved, it may record its reasons and refer the matter for appropriate directions.
This approach provides a structured mechanism for deciding whether a matter should remain before a Division Bench or be placed before a Single Bench.
Category I: Core GST Liability and ITC Disputes
Category I covers matters involving the main GST dispute, especially issues relating to taxability, classification, valuation, input tax credit and demand proceedings.
The following matters are covered under Category I:
• Misclassification of goods or services or both
• Wrong applicability of notification issued under the Act
• Incorrect determination of time of supply
• Incorrect determination of value of supply
• Incorrect admissibility of input tax credit, denial of ITC or blocking of credit
• Incorrect determination of liability to pay tax
• Whether the applicant is required to be registered or has been granted suo motu registration
• Whether any activity results in supply of goods or services or both
• Determination of tax not paid or short paid on outward supply under Section 73
• Excess ITC availed or utilised under Section 73
• Fraud or wilful suppression leading to non-payment or short payment of tax under Section 74
• Excess ITC availed or utilised under Section 74
In practical terms, Category I includes the most common and substantial GST litigation matters. Disputes relating to classification, valuation, ITC eligibility, tax liability and demand under Section 73 or Section 74 will generally fall under this category.
Category II: Registration, Refund, Recovery and Assessment Matters
Category II covers matters relating to registration, refund, assessment, recovery and related procedural orders.
The following matters are covered under Category II:
• Rejection or acceptance of application for registration
• Rejection or acceptance of application for amendment to registration
• Suspension of registration
• Order dropping show cause notice in relation to registration
• Denial of facility to pay tax under composition scheme
• Cancellation of registration
• Rejection or acceptance of application for revocation of cancellation of registration
• Order accepting reply of taxpayer or dropping show cause notice
• Disqualification of GST Practitioner or cancellation of enrolment of GSTP
• Transfer, initiation of recovery or special mode of recovery, including garnishee proceedings
• Tax wrongfully collected or tax collected but not paid to Government
• Assessment orders, including assessment of non-filers, persons evading registration or protective assessment
• Order for re-credit in electronic credit ledger where refund is rejected or wrongly obtained refund is deposited
• Order rejecting or granting provisional refund
• Order denying, reducing, withholding or granting refund
• Issues relating to provisional assessment
In practical terms, Category II will be relevant in cases involving GST registration cancellation, revocation, refund rejection, assessment orders and recovery proceedings.
This category is particularly important for businesses facing disputes relating to blocked business operations, such as cancellation of GST registration or withholding of refund.
Category III: Penalty, Seizure, Confiscation and Residual Matters
Category III covers matters relating to seizure, confiscation, penalty, provisional attachment and residual issues not specifically covered under Category I or Category II.
The following matters are covered under Category III:
• Issues relating to seizure or confiscation of goods, books, property or release thereof
• Orders relating to rectification or withdrawal of earlier orders
• Orders creating, modifying or withdrawing demand under earlier law
• Orders permitting payment in instalments
• Orders relating to provisional attachment of property
• Orders imposing penalty
• Orders permitting compounding of offence or withdrawing such order
• Any other matter not specifically covered under Category I or Category II
Category III therefore acts as a broad residual category. It includes consequential and procedural matters such as penalty, confiscation, seizure, provisional attachment and rectification orders.
The Office Order also clarifies that Category III matters shall generally be heard by the Bench assigned to decide the main issue from which the consequential order arises. However, exceptions have been provided for Karnataka, Guwahati and Kolkata State Benches.
Practical Impact of the Categorisation
This categorisation is useful because GST disputes can arise in different forms. Some disputes directly involve tax demand or ITC. Some relate to registration or refund. Others arise as a consequence of the main dispute, such as penalty, seizure or attachment.
By dividing matters into three categories, GSTAT has attempted to bring a structured listing mechanism for appeals.
For taxpayers and professionals, this means that while preparing a GSTAT appeal, it is advisable to identify the nature of dispute at the initial stage itself. This may help in better drafting of the appeal, classification of issues, preparation of documents and understanding the likely listing process.
Key Takeaways for Taxpayers and Professionals
The important takeaways from this Office Order are:
• All pending and future GSTAT matters shall first be listed before a Division Bench.
• Matters below Rs.50 lakhs and not involving any question of law may be placed before a Single Bench only after proper examination and approval.
• Category I covers core GST disputes such as classification, valuation, ITC, tax liability and demand under Sections 73 and 74.
• Category II covers registration, refund, assessment, recovery and related procedural matters.
• Category III covers penalty, seizure, confiscation, provisional attachment, rectification and residual matters.
• Category III matters will generally follow the Bench handling the main issue, subject to specified exceptions.
Professional Note
This Office Order is not merely an administrative arrangement. It provides an important procedural framework for the initial functioning of GSTAT.
For professionals handling GSTAT appeals, the categorisation of the matter should be reviewed carefully before filing. A clear understanding of whether the dispute falls under Category I, II or III can help in preparing a focused appeal, identifying the main issue, and avoiding procedural confusion at the stage of listing and scrutiny.
Conclusion
The GSTAT Office Order on categorisation of appeals is a welcome step towards systematic listing and hearing of GST appeals. By directing that all matters shall first be placed before a Division Bench and by classifying appeals into three categories, the Tribunal has provided a practical roadmap for handling different types of GST disputes.
As GSTAT begins to handle pending and future appeals, such procedural clarity will play an important role in ensuring smoother appeal filing, listing and hearing before the Tribunal.
Click here to read
https://efiling.gstat.gov.in/downloads/manual/creation-of-Benches-to-the-members.pdf
Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.
