Disclosed herein is method and system for hierarchical decoding of data packets in cellular communication network. At first, base station upon receiving data packets computes LLR values and evaluates computed LLR values through first Cyclic Redundancy Check (CRC) to determine successful decoding of data packets. When first CRC is unsuccessful and when SINR is greater than first predefined threshold, base station combines LLR values of intra base stations with computed LLR values for decoding data packets and performs second CRC check to determine if data packets are successfully decoded. The base station combines LLR values of intra base stations and LLR values of inter base stations with computed LLR values for decoding data packets when SINR value of inter base stations is greater than second predefined threshold and when evaluated second CRC is unsuccessful and performs third CRC. The present disclosure increases throughput and reduces latency significantly while decoding packets.